Summary of What This Blog Covers
- What It Is: An 83(b) election lets you pay taxes on stock now, at a lower value.
- Why It Helps: Saves money by locking in today’s value and qualifying for capital gains.
- The Risk: Miss the 30-day deadline and you lose the benefits.
- Our Role: Insogna helps you file on time and build a smart equity tax plan.
You’ve put in the late nights, built your team, and launched your vision. Equity compensation is the reward, a potential wealth builder that could shape your financial future. But here’s the twist: if you’re not handling that equity correctly from day one, the IRS is ready to claim a big slice of your success. That’s where the 83(b) election becomes your secret weapon.
And make no mistake, this isn’t amateur hour. When handled right, 83(b) can save founders, early employees, and executives tens of thousands or more in taxes. You don’t want to be scrambling for a “tax preparer near you” after that rocket takes off. You want an expert equity tax partner from day one.
At Insogna, a trusted CPA in Austin, Texas, we guide high-growth founders and executives through this process every week. Let’s dive deeper into why 83(b) matters, how it works, and when it could be your game-changer.
1. The Tax Trap Behind Vesting Schedules
Vesting means you don’t own the full stock grant until certain milestones or time have passed and that’s exactly when the IRS swoops in. On each vesting date, the shares are considered income at their then-current fair market value. That can trigger a nasty tax hit especially when your company is growing fast.
Here’s the problem:
- You’re taxed annually as each portion vests.
- Taxes are based on ordinary income rates—up to 37% for federal, plus state.
- You may owe taxes on shares you can’t sell, creating cash-flow stress.
And with limited liquidity, founders and executives often pull from savings to meet that tax bill, definitely not ideal.
That’s the starting point. Now, let’s bring in the 83(b) strategy.
2. What an 83(b) Election Does and How It Changes Everything
Filing an 83(b) election sends a message to the IRS: “Tax me now, not later.” You pay tax based on today’s share value before it vests and before the big valuation jump.
Benefits of Filing 83(b):
- Tax is based on early-value, often pennies on the dollar.
- Future growth qualifies as long-term capital gains, not ordinary income.
- One-and-done tax event versus multiple taxable events.
- Possibly unlock QSBS benefits with a 5-year holding period.
- Mitigates liquidity crunch. You plan and pay tax upfront with purpose.
Now it’s not just about winning; it’s about winning with style.
3. Five Ways an 83(b) Election Pays Off With Real Numbers
1. Lock in Today’s Value
Let’s say your grant gets valued at $0.50 per share at grant, but hits $5/share within a year. You’ve been granted 200,000 shares, with a 4-year vest:
- Without 83(b), you’ll pay ordinary income tax on each vesting increment, based on current share value—potentially hundreds of thousands in tax.
- With 83(b), you declare $100,000 today. At a 24% rate, that’s $24,000 in tax, you don’t pay again on vesting.
2. Flip to Long-Term Capital Gains
Once you file 83(b), the clock to long-term capital gains starts. After one year, any sale profits are taxed at 15–20%, not ordinary income. That’s a lever that every Austin, Texas CPA worth their salt can’t wait to pull.
3. Qualify for Tax-Free QSBS Gains
If you hold shares for five years and meet QSBS criteria under IRC Section 1202, your gains may be completely tax-free. Some founders walk away with $10M+ exempted from federal tax. That’s next-level tax planning.
4. Avoid Multiple Tax Events
Without 83(b), you’ll be taxed repeatedly over the vesting timeline often at much higher valuations. With 83(b), you manage one calculated event, locking in low cost upfront. That’s predictability not chaos.
5. Prevent Liquidity-Less Tax Bills
Ever been taxed on shares you couldn’t sell? Painful. After an 83(b), you pay once, at a point when the valuation is lower and you likely have liquidity (thanks to founding or operating capital).
4. Risks and the 30-Day Deadline
This part isn’t fun but it matters.
Risks of Filing 83(b):
- You pay tax regardless of what happens later. If your startup fails, that payment is done.
- Misfiling or misunderstanding valuation may invite IRS scrutiny.
Deadline is 30 Days from Grant Date
No extensions. No leniency. File the 83(b) form, pay the tax, and submit within that tight window. No mailbox rule applies. That’s why having a tax advisor near you, preferably a certified public accountant, on standby is critical.
5. Getting the Valuation Right Because IRS Eyes Accuracy
The IRS cares about one thing: whether the 83(b) valuation is defensible. That requires:
- A current 409A appraisal, OR
- Company board resolution or compensation committee minutes, OR
- A defensible starting value based on recent capital round data.
That cost is minimal compared to the tax savings. Plus, your CPA or taxation accountant should store those documents as audit defense.
6. Beyond the Election—Building a Complete Equity Tax Plan
Filing 83(b) is step one. But equity strategy extends far beyond:
- Entity Structure Advice: Is your entity an LLC, S‑Corp, or C‑Corp? How does that affect tax?
- RSU & ISO Management: Can you exercise options smartly? Manage AMT?
- Exit Strategy Integration: Prepping for QSBS, B‑batches, or second closings.
- International Considerations: Non-resident taxes, time-zone vesting, FBAR filing if needed.
That’s why business owners don’t just want or need a “tax preparer near them.” They need a high-level Austin tax accountant who architects tax strategy.
7. Real-World Equity Planning Workflows That Win
• Pre-Grant Consultation
We work with founders before share issuance, evaluating if 83(b) aligns with your liquidity position, vesting schedules, and exit timelines.
• Valuation Snapshot
We secure and document a defensible valuation (409A appraisal or board-based) timestamped and filed.
• Election Filing
We draft and file the 83(b), issuing copies to IRS, your employer, and retaining a file.
• Ongoing Support
We monitor vesting triggers, exit strategy, QSBS compliance, and eventual sale. A multi-year partnership from grant to liquidity.
8. How This Fits into Your Taxes in 2025
- Market valuations are rebounding. Late filings cost more now.
- Equity-based pay is normalized and remote hires spread across the world increase complexity.
- IRS scrutiny on QSBS and private grants is ramping up.
- If you’re searching for accountants, tax consultants, or cpa office near you, the reality is we focus on sophisticated equity strategies not just tax prep.
9. Checklist: Execute 83(b) Like a Pro
Step | What To Do |
Grant received | Verify grant date and downtown timeline |
30-day deadline | File completed 83(b) form + IRS copy + employer copy |
Tax paid upfront | Calculate and remit tax payment with the election |
Track one-year vest clock | Monitor for long-term capital gains qualification |
QSBS five-year hold track | Track dates and documentation for tax-free exit potential |
10. Why Founders Who Wait Pay More (Literally)
In 2025’s fast-moving market, a $0.50/share grant today becomes $5/share in months. Every week you delay could cost tens of thousands in tax liability and that’s just on vesting alone.
If you’re relying on a generic tax services, tax accountant, or a tax preparer near you, you’re leaving strategy on the table. And for founders who want to build longevity, every step must be calculated.
Final Word: Don’t Leave Equity to Chance
Equity is more than compensation, it’s your wealth engine. Don’t let vesting curves, missed deadlines, or IRS default rules erode it. You want a partner who makes equity tax planning an asset not a liability.
At Insogna, we help founders, executive teams, and high-achievers treat their equity with the strategy it deserves. We file the 83(b) right. We align your tax strategy with exit goals. We do the legwork early for maximum upside.
If you’ve got equity—especially if it’s vesting over time—don’t wait. Schedule your complimentary 15‑minute equity tax strategy call with Insogna, the Austin CPA that helps founders win. You earned that equity. Let’s make sure it earns for you.