Stock Incentive Plan Sec 83(b): Taking Full Advantage of Stock Purchase Plans

83(b) Election Stock Incentive Plan Sec 83(b): Taking Full Advantage of Stock Purchase Plans

Stock Incentive Plan Sec 83(b): Taking Full Advantage of Stock Purchase Plans

Imagine that you come into work one day to have a stock incentive plan Sec 83(b) form presented to you. The look of confusion and even anxiety that would likely creep over you is something that plenty of people recognize in themselves. However, we know that it is necessary to grasp what these forms mean and how they relate to our experience as employees of a given company. This is why we want to look at what this form is and how you can successfully file one out with as little terror getting into your head as possible. The greater your sense of calm and understanding, the better. DoNotPay is there to help you with these forms and every step that comes after.

What Is the SEC 83(b) Form?

There are stock offerings made to employees as a benefit and an incentive to hire and retain them as hard-working and diligent employees. That said, some of it may be restricted stock, and you might want to know something like "83 b if I quit before the first year will I owe taxes?". These types of delicate questions come up when people start to look at their stock plans and try to figure out what kind of tax burden they may have to endure with the company’s plan.

What you should know about the Section 83(b) form is:

  1. It is a form meant to lower your tax burden on shares owed.
  2. It is a form that helps you pay taxes on the value of your shares when they were acquired.
  3. It is a legal way to pay less to the IRS for your increased company ownership.

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 advantageousSituations where filing an 83(b) election is less advantageous
The income amount is smallThe income amount is large
Growth is expected to be moderate to strongGrowth is expected to be low to moderate
Low risk of share forfeitureModerate to high risk of share forfeiture

No one wants to fork over more taxes than what they rightfully owe, and it just makes sense to use a Sec 83(b) form to help reduce the amount of taxes owed when looking at how they will report new shares that they have on hand.

How Do I Fill Out an SEC 83(b) Form Myself?

Your employer may offer you this form, or you may have to ask them to present one to you, depending on how informed they are about the importance of these forms. Whatever the case may be, you will want to get this form filled out as rapidly as you can. You cannot delay and hope that things will just fall into place for you with the IRS. That is not going to happen, and that is not a risk that you should ever attempt to take.

Here are a few of the drawbacks related to attempting to fill out the Sec 83(b) forms yourself:

  1. The IRS requires that you submit the forms within 30 days of receiving your shares.
  2. You must print out a hard copy of the form, fill it out by hand, and submit it via the mail to the IRS.
  3. You can be penalized if you incorrectly fill out any part of the form.

There are a lot of things to sweat when it comes to filling out these types of forms with the IRS, and it is not a pretty picture to think that a simple and honest mistake or two could place you in a situation where you do not get the benefits of the Sec 83(b) form. Instead of going through all of that trouble yourself, why not consider using a service like DoNotPay to help you make a difference? 

What Specifically DoNotPay Does

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:

  1. Enter the email address of the employee/shareholder you want to grant shares to.

     

  2. Upload a copy of the Restricted Stock Purchase Agreement.

     

  3. 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.

     

DoNotPay Can Offer a Helping Hand With This Form

It is a mountain to climb when filing the Sec 83(b) form the exact way the IRS wants it to be done if you don't have some help from an outside service such as DoNotPay. They have taken this burdensome task and decided to automate it. They realized that many people would happily fill out their Sec 83(b) forms as long as the process was made relatively straightforward for them to do. Thus, DoNotPay took it upon themselves to make the following user-friendly options:

  • Automated filing of the Sec 83(b) form
  • Easy fill sections to make it simpler to fill out the form in the first place
  • A step-by-step guide for how to correctly fill out this form in the proper time frame to get it to the IRS when it needs to be

It is hard to find another service anywhere in the world that works as hard as the people at DoNotPay do to help make sure everyone they come in contact with is served to the utmost of their ability. They know that the people who come to them are looking to simplify their life. DoNotPay believes that their system is the answer these people have been looking for. 

The Three Simple Steps for Employers to Take To Make It Happen

Getting into the DoNotPay system as an employer and getting your Sec 83(b) forms taken care of can be done very rapidly. You just need to do the following three steps:

  • Upload the e-mail address of the employee to be awarded shares
  • Upload a copy of the restricted stock agreement forms
  • Let the employee know that you have set this up, so they know to look for the e-mail they receive from DoNotPay

Nothing more has to be done administratively to make this happen. The employee will simply need to keep an eye out for an e-mail from DoNotPay with the instructions on how to complete the Sec 83(b) form, and they are all set. It will be once less thing on the plate of employers and employees, and everyone can rest assured that only the minimum amount of taxes owed are paid.

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