Your 83(b) Election Resource Center

You may have heard of an 83(b) election, which is intended to help you manage the tax liability related to your stock options. This website is meant to help you understand what an 83(b) election is and how to make it.

Let’s first cover a few key questions you might have:

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What is an 83(b) election?

An 83(b) election is made using a form you send to the Internal Revenue Service (IRS) letting them know you exercised options (and/or purchased shares) before the vest date(s) (“early exercise”), and that you want to be taxed on the value of your shares at the time of exercise rather than on the value when the options vest.

Why should I consider making an 83(b) election?

Simply stated, this election could reduce the ordinary income tax you are required to pay if the value of your shares increases over time. Typically you get taxed once your options vest, on the difference between what you paid to purchase the shares and their value at vest (the “spread”). With the 83(b) election, the IRS will know you want to be taxed based on the value of the shares when they are purchased instead of when they vest.

What are the risks of making an 83(b) election?

If you leave your company prior to the vesting date(s) of your options, or if when you sell your shares, the value of your shares is less than when you made the election, you will not receive a refund for the taxes you already paid. Also, in most cases, you cannot reverse the 83(b) election once it’s been made. If you are not sure if an 83(b) election is right for you, consult with a tax or financial advisor to review your personal situation and help you decide.

What happens if the 83(b) election is not made?

You must complete the 83(b) Form for each early exercise transaction that you complete. If the 83(b) Form is not filed by the deadline (30 calendar days following the date you exercise your options), there may be additional tax implications. Please consult with a tax or financial advisor if you have questions.

Reminder!

The IRS Section 83(b) Form must be completed and postmarked to the IRS within 30 calendar days of the date you exercise your options.

Also, you must complete the Section 83(b) Form for each early exercise transaction that you complete.

Review the instructions

Learn how to complete the IRS Section 83(b) Form with these easy-to-follow instructions.

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Start here! You must complete the following four steps:

Download and complete the IRS Section 83(b) Form.

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Find the correct IRS address to mail your form to, based on your state.

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Mail your form to the IRS, as a certified letter with a return receipt, within 30 calendar days of your exercise date.

Inform your employer about this election.

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