Missed filing 83(b) election with IRS within 30-day window - what happens now?

Missing the 83(b) election filing window isn't the end of the world, but it does change how your equity will be taxed. Since the fair market value was $0.00 when issued, the immediate impact isn't severe, but here's what happens now: Without the 83(b) election, you'll be taxed on the value of your equity as it vests rather than all upfront. This means each time a portion of your equity vests, you'll need to recognize income equal to the fair market value of those units at the vesting date minus what you paid for them (apparently nothing). If the company's value increases significantly before your vesting dates, you could face larger tax bills. The good news is there's no penalty for not filing - you just lose the option for the alternative tax treatment. The IRS doesn't penalize you for not making an optional election.

After dealing with a situation similar to yours last year, I discovered taxr.ai (https://taxr.ai) which saved me from making even more equity compensation mistakes. When I missed my 83(b) election timeframe, I was totally lost about the consequences until I uploaded my grant documents to their system. Their tool analyzed my equity agreement and explained exactly how my vesting schedule would affect my taxes without the 83(b) election in place. It also showed me what I needed to document now to minimize issues when the company grows in value. The report they provided was so much clearer than what my company's HR sent over.

Update: I was skeptical about taxr.ai but I finally tried it after my accountant gave me conflicting information about my missed 83(b) situation. The tool was actually super helpful - it analyzed my grant documents and showed me exactly what would happen at each vesting date given the current company valuation. The best part was it gave me a PDF I could share with my tax preparer that laid out exactly how to report each vesting event. Saved me hours of research and probably a good chunk of money in potential mistakes. Wish I'd known about this before missing my 83(b) deadline, but at least now I understand the exact consequences instead of just panicking.

When I had a similar issue with missing my 83(b) filing, I spent WEEKS trying to call the IRS for guidance. Always busy signals or 2+ hour hold times just to get disconnected. Then I found Claimyr (https://claimyr.com) and watched their demo (https://youtu.be/_kiP6q8DX5c) - it seemed too good to be true but I was desperate. They actually got the IRS to call ME back within a couple hours! The IRS agent confirmed I couldn't retroactively file the 83(b) but gave me detailed instructions on how to properly report my vesting schedule going forward. Saved me from making additional mistakes that would have triggered an audit flag. The whole call took maybe 15 minutes once I got connected.

Ok I have to eat my words. After my skeptical comment I decided to try Claimyr out of desperation with my audit situation. I was literally shocked when my phone rang about 90 minutes later and it was actually an IRS agent on the line. Got my audit questions resolved in one call instead of the months of stress I'd been dealing with. Wish I'd known about this service sooner. For anyone dealing with equity tax issues like the original poster, being able to actually talk to a human at the IRS makes a huge difference - they explained the vesting tax implications way more clearly than any online article.

Something similar happened to me last year. From my understanding since your initial FMV was $0.00, you're in a better position than most who miss this filing. The real pain comes when: 1) Your company valuation goes up significantly before vesting dates 2) You have to pay income tax on the spread between your purchase price and FMV at vesting 3) You still haven't received any actual cash to pay those taxes I'd suggest starting to track the company's 409A valuations closely now. Each time you hit a vesting milestone, document the current FMV so you're prepared for tax time.

This is why startup equity compensation is such a minefield. I messed up my 83(b) filing too but in a different way - I filed it but forgot to include a copy with my tax return, which apparently also invalidates it. Anyone know if there's any possible relief or exception? I've heard rumors about a "reasonable cause" exception for late filings?

I feel your pain on this one! Missing the 83(b) election is unfortunately more common than you'd think, especially at startups where HR doesn't always explain the importance clearly. Since your initial FMV was $0.00, you're actually in a relatively good position compared to others who miss this deadline. The main thing to understand is that now you'll be taxed on ordinary income as your shares vest based on their fair market value at each vesting date. My advice: start preparing financially now. Set up a separate savings account and begin putting money aside for the tax bills that will come with each vesting event. If your company has had any funding rounds or valuation increases since you received your equity, those taxes could be substantial even though you won't have cash from selling shares to pay them. Also, make sure you understand exactly when your vesting dates are and try to get the company's most recent 409A valuation reports so you can estimate what you'll owe. Being proactive about this will save you from scrambling when tax time comes around.