Section 83(b) Election: Profits Interests
When it comes to the profits interest in your shares, you want to make sure that you go ahead and file an 83(b) election so that you can avoid paying unnecessary fees later. Without this form, at the time of vesting, you will be responsible for paying taxes on the value of these shares, regardless of whether you have been able to use the money. With an already slim timeline to submit the form, you must do it right the first time. This is why many are choosing DoNotPay to automate this process, making it faster, easier, and more efficient.
What Is an 83(b) Election Form?
This form is designed to determine when to file your taxes on the profits interest you gain from the shares you own. With this form, you can provide information about the vesting of the shares and the conditions they were received. The IRS gets all the necessary details surrounding these shares with this form.
What Is the Benefit of an 83(b) Election?
The benefit to filing an 83(b) election form is the tax savings you get on the shares by paying taxes on their initial cost and not what they will be valued at later when they are vested. But there are downsides as well. The table below outlines situations where filing an 83(b) election is more and less advantageous:
|Situations where filing an 83(b) election is more advantageous||Situations where filing an 83(b) election is less advantageous|
|The income amount is small||The income amount is large|
|Growth is expected to be moderate to strong||Growth is expected to be low to moderate|
|Low risk of share forfeiture||Moderate to high risk of share forfeiture|
How Long Do You Have to Make an 83(b) Election?
Once you receive the shares with profits interest, you need to make sure that you get this information submitted to the IRS right away. To stay within compliance, you need to have this form completed and submitted to the IRS office within 30 days of receiving the shares. The best practice is to go ahead and file the day after to have time for the form to be submitted and reviewed, keeping you compliant with the tax office.
What Is the Best Way to Fill Out an 83(b) Form?
While the IRS has recently started accepting electronic signatures for documents, they are still not keen on this process happening by individuals without a secure portal like DoNotPay. For now, if you intend to file the form on your own, you will be forced to file it through certified mail as a hard copy, hoping that it meets the requirements.
What Are the Steps to Filing an 83(b) Election?
There are many steps to consider when filing an 83(b) election form.
- Know the last date to file the form for the current tax year. If you are getting close to that date when you start the process, you may begin to run into some obstacles.
- Gather the necessary documents to send with your 83(b) form. You will also need to complete a cover letter to attach and send with the form to the IRS.
- The form will need to be printed from the IRS website, on page 9 of the Election forms. Please note this document is attached to about ten other pages, so you need to be sure you print the correct page.
- Look up the state you reside in to see where you must submit the document. It will be going to a state office by mail based on the information provided.
- If you mail in the document, you need to send a stamped envelope so that they will ship back a stamped copy for your records.
These steps for filing the 83(b) election on your own are tedious and not as easy as using DoNotPay to file the form.
How to File an 83(b) Election Form Using DoNotPay
If you want to file an 83(b) election form but don't know where to start, DoNotPay has you covered in 3 easy steps:
- Enter the email address of the employee/shareholder you want to grant shares to.
- Upload a copy of the Restricted Stock Purchase Agreement.
- And that's it! We'll email the grantee with a special link so they can access the DoNotPay 83(b) Election Form Filing Product and file their forms automatically. You'll be able to see the completed task on your dashboard, and the grantee will receive a tracking number to track the status of their shipment as well.
Why Use DoNotPay to File an 83(b) Election Form
If you need to file an 83(b) Election Form to the IRS, it needs to be done correctly the first time it is submitted. With DoNotPay, you get the following from their submission:
- Quick. You can complete your portion of the form in just a few moments, allowing DoNotPay to take the rest of the task.
- Simple. From the comfort of your couch, you can simply enter your information on your smartphone or tablet.
- Efficient. Once you verify the information entered is correct, DoNotPay securely stores this information to be correct and accurate when the form is submitted.
DoNotPay takes the stress out of filing this form and wonders if you did it correctly. You can have peace of mind after you use DoNotPay for submission.
DoNotPay Can Be Used to File a Variety of Forms
In addition to the 83(b) form, DoNotPay can assist with other IRS forms that you may need to file for your personal and business needs. Navigating the different government websites and reentering your personal information makes room for human error, and DoNotPay eliminates that.
What Else Can DoNotPay Do?
While DoNotPay can help you with various IRS forms, there are also a few more tasks that they can easily help you complete in their fast, easy, and successful way:
- DoNotPay can assist you with completing your small business loan request letter.
- If you need to file a breach of contract, DoNotPay can assist with getting that filed right away.
- Get assistance with your next online fax.
DoNotPay offers a variety of services to help get you the assistance that is convenient, easy, and efficient!