Filing an 83(b) election can save you thousands of dollars in taxes, but you must know where to send it to stay compliant. The IRS assigns specific mailing addresses based on your location, and if you send your election to the wrong place, you could invalidate this important tax document.

Send your 83(b) election to the same Internal Revenue Service Center where you file your annual tax return. The mailing address depends on your state of residence or business location.

The IRS offers specific guidance on where to file elections and statements so you can find the correct address. Getting this right matters because 83(b) elections have saved taxpayers millions of dollars over the years.

The rigid filing rules can be frustrating if you don't know the proper procedures. This guide explains everything you need to know about filing your 83(b) election correctly.

Key Takeaways

• Send your 83(b) election to the same IRS service center where you file your regular tax returns.
• File the election within 30 days of receiving restricted stock or other vesting equity.
• Making an 83(b) election can significantly reduce your future tax burden but carries risks if the stock value decreases.

Where To Send Your Section 83(b) Election

The IRS requires you to send your 83(b) election to a specific service center based on your location and circumstances. You must file within 30 days of receiving restricted stock and provide proper documentation to prove timely submission.

Determining the Correct IRS Service Center

Send your Section 83(b) election to the correct IRS service center to ensure proper processing. The IRS provides specific guidance on where to file certain elections and statements based on your location.

The mailing address depends on where you live or work when you receive the restricted stock. Check the current IRS Publication 1045 or the IRS website for the most up-to-date service center addresses.

Key factors that determine your filing location:

• Your home address
• Your work location
• The company's location that issued the stock
• Whether you are a U.S. resident or non-resident alien

Verify the address before mailing because the IRS occasionally updates service center locations. Using an outdated address could delay processing or cause your election to be considered late.

Filing Deadlines and Timeliness

You have exactly 30 days from the date you receive your restricted stock to file your 83(b) election. This deadline is strict and cannot be extended for any reason.

The 30-day period starts on the grant date, not when you start working or when the stock begins vesting. Count calendar days, including weekends and holidays.

Critical timing requirements:

• File within 30 days of grant date
• Postmark date determines timeliness
• No extensions available
• Late filings are not accepted

If you miss this deadline, you lose the tax benefits of the 83(b) election permanently. The IRS does not accept late elections under any circumstances.

Required Documentation and Proof of Mailing

Send your 83(b) election using certified mail with return receipt requested to create a paper trail. The IRS typically does not send confirmation of receipt for 83(b) elections, so certified mail documentation serves as your primary proof of filing.

Your mailing package should include:

• Original signed 83(b) election form
• Copy for your records
• Return envelope with postage (if requesting IRS-stamped copy back)
• Cover letter with clear instructions

Provide a copy of your filed election to your employer or the company that issued the restricted property. Deliver this copy separately from your IRS filing.

The certified mail receipt serves as legal proof that you filed on time if any questions arise later during tax audits or reviews.

Steps For Filing an 83(b) Election

To file, complete the proper forms, send them to the correct IRS address with certified mail, and include a copy with your tax return. The process has strict deadlines and specific requirements that you must follow exactly.

Completing the 83(b) Election Form

You can file your 83(b) election using either a written statement or Form 15620 for streamlined online filing. The IRS allows both options.

Required Information:

• Your full name and social security number
• Tax year the election applies to
• Description of the property received
• Date you received the property
• Restrictions on the property
• Fair market value of the property
• Amount you paid for the property

Include the exact language "Election under Section 83(b)" at the top. Sign and date the form.

If you use the written statement format, follow the specific template requirements. Clearly label and accurately provide each piece of information.

Mailing Instructions and Best Practices

Send your 83(b) election to the IRS service center where you file your tax return. The mailing address depends on your home state.

Mailing Requirements:

• Use certified mail with return receipt requested
• Mail within 30 days of receiving the stock
• No extensions are available for this deadline

Certified mail provides proof of timely filing, which protects you if the IRS claims they never received it. Keep the certified mail receipt and return receipt as permanent records.

Give a copy to your employer as well. This ensures they have the proper documentation for their records and tax reporting.

Attaching a Copy to Your Tax Return

Attach a copy of your 83(b) election to your tax return for the year you received the stock. This goes with either your Form 1040 or other applicable tax forms.

Staple the copy to your return before mailing or uploading if filing electronically. If you work with a tax professional, provide them with the election copy during tax preparation.

Important Notes:

• File the election copy with the same tax year as the stock grant
• Keep original receipts and documentation
• Maintain records for at least seven years

This attachment helps the IRS match your election to your tax return. It also provides additional proof that you filed the election properly and on time.

Understanding 83(b) Election Eligibility

The 83(b) election only applies to specific types of equity compensation that meet strict IRS requirements. You must receive stock subject to vesting schedules and substantial risk of forfeiture to qualify for this tax election.

Restricted Stock and Vesting Triggers

Restricted stock is the most common scenario for filing an 83(b) election. This stock-based compensation comes with specific conditions that you must meet before you fully own the shares.

Vesting schedules create the trigger for 83(b) election eligibility. Common vesting arrangements include:

• Four-year vesting with one-year cliff
• Monthly or quarterly vesting over multiple years
• Performance-based vesting milestones

The 83(b) election only applies if you are receiving stock that is subject to vesting. Without a vesting schedule, you cannot file this election.

You must receive actual stock certificates or stock ownership. Promises of future stock grants do not qualify for 83(b) elections.

Stock Options and 83(b) Election Applicability

Stock options present a more complex situation for 83(b) election eligibility. The type of option determines whether you can file this election.

Incentive stock options (ISOs) typically do not qualify for 83(b) elections. These options have no taxable event at grant, making the election unnecessary.

Non-qualified stock options (NQSOs) may qualify if you receive restricted stock upon exercise. The election applies to the restricted stock received, not the original option grant.

Early exercise options allow you to file an 83(b) election. When you exercise unvested options and receive restricted stock, you can file an 83(b) election on those shares.

The key factor is receiving actual stock ownership with restrictions, not just the right to purchase stock later.

Substantial Risk of Forfeiture Conditions

Substantial risk of forfeiture is required for 83(b) election eligibility. Without this risk, the IRS considers your stock fully vested and taxable immediately.

Common forfeiture conditions include:

• Continued employment requirements
• Performance milestones you must achieve
• Company buyback rights at below market value
• Specific time-based restrictions

The risk must be substantial in the IRS's view. Minor restrictions or easily met conditions may not qualify.

You lose eligibility if your stock has no meaningful chance of forfeiture. The IRS examines the actual likelihood that you could lose your shares, not just written restrictions.

Forfeiture conditions must exist at the time you receive the stock. Adding restrictions later does not create 83(b) election eligibility.

Tax Implications Of Making an 83(b) Election

Making an 83(b) election creates immediate tax obligations based on fair market value at grant time rather than vesting. You pay ordinary income tax upfront but gain favorable capital gains treatment on future appreciation.

Ordinary Income Tax Calculation

When you file an 83(b) election, you pay ordinary income tax on the fair market value of your restricted stock at the time of grant. This creates an immediate tax liability even though your shares haven't vested yet.

The taxable amount equals the fair market value minus what you paid for the shares. If you received shares worth $10,000 and paid nothing, you owe ordinary income tax on the full $10,000.

Your ordinary income tax rates range from 10% to 37% depending on your total income. You could owe between $1,000 to $3,700 on a $10,000 grant.

The election accelerates your entire tax obligation to year one regardless of your vesting schedule. You pay taxes on unvested shares that you might never actually receive if you leave the company early.

Capital Gains Treatment

After making an 83(b) election, any future increase in your stock's value receives capital gains treatment instead of ordinary income treatment. This provides significant tax advantages when you eventually sell your shares.

Capital gains rates are much lower than ordinary income tax rates. Long-term capital gains rates are 0%, 15%, or 20% depending on your income level.

Your cost basis becomes the fair market value you reported on your 83(b) election. If your shares were worth $10,000 when you filed and you sell them for $50,000, you only pay capital gains tax on the $40,000 difference.

Without an 83(b) election, the entire $50,000 would be taxed as ordinary income when shares vest. This could mean paying 37% instead of 20% on most of the gain.

Impact on Taxable Income and Tax Rates

Filing an 83(b) election immediately increases your taxable income for the current tax year. This additional income might push you into a higher tax bracket, affecting your overall tax rate.

Your W-2 form shows the added income and your employer withholds payroll taxes, including Social Security and Medicare, from your regular paychecks.

Higher taxable income can affect other tax benefits. You might lose eligibility for certain deductions or credits that have income limits.

Consider the timing carefully. Filing near year-end gives you less time to plan for the tax impact through estimated payments or increased withholding.

Federal Income Tax Considerations

When you make an 83(b) election, your federal income tax liability increases immediately. You must have enough cash available to pay these taxes since you haven't actually received any money from selling shares.

You must include the election with your tax return for the year you made it. You also need to send copies to the IRS within 30 days of grant and provide a copy to your employer.

State income taxes also apply in most states. These generally follow similar rules to federal treatment.

If your shares become worthless later, you cannot reverse the 83(b) election. You will have paid taxes on income you never actually received, with limited ability to recover those tax payments.

Considerations And Risks When Filing

Filing an 83(b) election carries significant tax and financial risks that can cost you thousands of dollars. Paying taxes early on restricted stock requires careful analysis of forfeiture scenarios and professional guidance.

Potential Drawbacks of Early Taxation

When you file an 83(b) election, you pay taxes immediately on the full fair market value of your restricted stock. This means you owe money upfront before the shares actually vest.

The biggest risk is paying taxes on income you might never receive. If your company's stock price drops after filing, you still paid taxes based on the higher original value.

Cash flow becomes a major concern. You need enough money to pay the tax bill within 30 days of receiving the stock grant. This can create financial strain, especially for startup employees with limited cash.

The tax burden can be substantial even when paying at grant value. If you receive $50,000 worth of restricted stock, you might owe $15,000 to $20,000 in taxes depending on your tax bracket.

You cannot get a refund if the stock becomes worthless later. The taxes you paid upfront are gone forever, even if your equity ends up having zero value.

Consequences of Forfeiture After Election

The risk of forfeiture creates the most dangerous scenario when filing an 83(b) election. If you leave your company before your restricted stock vests, you lose the shares completely.

You cannot recover the taxes already paid. Even though you forfeit the stock, the IRS keeps all the income taxes you paid when filing the election.

This creates a double loss. You lose both your potential equity and the cash you spent on taxes.

Common forfeiture scenarios include:

• Voluntary resignation before vesting
• Termination for cause or performance issues
• Company acquisition that cancels unvested shares
• Startup failure before vesting period ends

The timing makes this especially painful. Many employees leave companies within the first few years, often before their restricted stock fully vests.

Consultation With a Tax Professional

You should always work with a qualified tax professional before filing an 83(b) election. The decision involves complex tax calculations and risk analysis that require expertise.

A tax professional can model different scenarios to show potential outcomes. They calculate the tax savings if everything goes well versus the losses if you forfeit the stock.

Key areas where you need professional help:

• Determining fair market value for tax purposes
• Calculating immediate tax liability across federal and state levels
• Analyzing your personal financial situation and cash flow
• Evaluating company stability and likelihood of success

The 30-day filing deadline makes professional consultation urgent. Delays can jeopardize your ability to file within the required window.

Tax professionals also help with proper filing procedures and required documentation. Mistakes on the election form or sending it to the wrong address can invalidate the entire election.

Frequently Asked Questions

The 83(b) election process involves strict timing requirements and specific filing procedures. Understanding the deadlines, electronic options, and tax implications helps ensure proper submission to the IRS.

What is the deadline for submitting an 83(b) election?

You must file the 83(b) election within 30 days of receiving the restricted stock or equity. This deadline is firm and cannot be extended.

The 30-day period starts from the date you receive the stock grant. If you miss this deadline, you cannot make the election later.

The IRS does not accept late filings for 83(b) elections. Missing the deadline means you lose the opportunity to make this tax election permanently.

How can one electronically file an 83(b) election with the IRS?

You can now file Section 83(b) elections online using Form 15620. This electronic option is a recent addition by the IRS.

Form 15620 allows you to submit your 83(b) election digitally instead of mailing a paper form. This method provides faster processing and confirmation.

You can also make the choice by filing Form 15620, Section 83(b) Election with the Internal Revenue Service Center where you file your return.

What are the potential advantages and disadvantages of making an 83(b) election?

The main advantage is paying taxes on the current fair market value instead of the higher value at vesting. This can result in significant tax savings if the stock price increases.

You also convert future appreciation from ordinary income to capital gains tax treatment. Capital gains rates are typically lower than ordinary income tax rates.

The major risk is paying taxes upfront on stock that may lose value or become worthless. If the stock price drops, you cannot recover the taxes you already paid.

What information must be included when reporting an 83(b) election on a tax return?

You must include the fair market value of the stock on the grant date as compensation income on your tax return. This amount appears on your W-2 or as other income.

The election requires you to report the number of shares and a detailed description of the stock. You must specify the type of shares and any restrictions that apply.

You need to attach a copy of your 83(b) election form to your tax return for the year you made the election. This provides documentation of your choice.

Is it possible for a legal entity to opt for an 83(b) election, or is it limited to individuals?

The 83(b) election is available to individuals who receive restricted stock or equity compensation. This includes employees, consultants, and service providers.

Legal entities like corporations or partnerships cannot make 83(b) elections for themselves. The election is personal to the individual receiving the equity.

However, individuals who receive equity through their work for legal entities can still make the election. The election applies to the person, not the company structure.

How to obtain a copy of the 83(b) election form for submission?

I can access Form 15620 for electronic filing directly from the IRS website. This is the official form for making 83(b) elections online.

For paper submissions, I need to prepare a written statement that includes all required information. The IRS does not provide a specific paper form for 83(b) elections.

The written statement must contain my name, address, taxpayer identification number, and details about the stock grant. I can find the complete requirements in IRS Publication 525.