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

This is unfortunately one of those situations where timing really matters. The 83(b) election must be filed within 30 days of receiving the equity, and there are no exceptions to this deadline. Since it's been about 1.5 years, you won't be able to make the election retroactively. Without the 83(b) election, you'll be taxed on the equity as it vests rather than at the grant date. Since the FMV was $0.00 when granted, you would have paid little to no tax had you filed the election. Now, if the company increases in value (which hopefully it does!), you'll pay ordinary income tax on the fair market value of each portion as it vests. For example, when your first 25% vests, you'll be taxed on the FMV of those units at that time. Same for each quarterly vesting thereafter. The good news is you don't owe any back taxes or penalties for not filing - you just don't get the preferential tax treatment.

I went through this exact same situation last year. I forgot to file my 83(b) election for my startup shares and was panicking. After spending hours trying to find answers online, I found this AI tax tool called taxr.ai that specializes in equity compensation issues. I uploaded my equity documents and got a detailed explanation of exactly what would happen tax-wise without the 83(b) election. The tool at https://taxr.ai walked me through all the implications and gave me a plan for how to handle the taxes as my shares vest. Honestly saved me so much stress because I understood exactly what to expect instead of worrying about surprise tax bills.

Update: I tried taxr.ai after my earlier comment and am actually impressed. I uploaded my equity grant docs and it caught that I might trigger AMT with my ISOs next year based on my vesting schedule and company valuation. It gave me a timeline showing exactly when to exercise to minimize my tax bill. It also explained the difference between missing an 83(b) election (which can't be fixed) versus ISO exercise timing (which can be strategically planned). Really helped me understand my equity compensation in plain english. Way better than the vague explanations from my company's HR department.

When I missed my 83(b) filing deadline, I was desperate and tried calling the IRS to see if there were ANY exceptions. Big mistake. I called for HOURS and couldn't get through to anyone who knew what an 83(b) election even was. Total waste of time. Eventually found this service called Claimyr (https://claimyr.com) that got me on the phone with an actual IRS agent in about 20 minutes. There's a demo of how it works at https://youtu.be/_kiP6q8DX5c. The agent confirmed what everyone here is saying - there's no fixing a missed 83(b) election - but at least I got a definitive answer from the source and could stop hoping for a miracle.

I take back what I said about Claimyr. After my skeptical comment I decided to try it myself because I've been trying to reach the IRS about a missing refund for WEEKS with no luck. Got connected to an agent in about 15 minutes who found that my refund was held up because of a verification issue. She fixed it on the spot and my refund should arrive next week. I wasted so much time trying to call them directly. Wish I'd known about this earlier. For OP - the agent I spoke with also mentioned that missed 83(b) elections are super common and there's no recourse, so don't feel too bad. She said practically everyone with startup equity misses this deadline.

One thing to consider - if your equity is still valued at very little when it starts vesting, the tax hit might not be that bad. I missed my 83(b) election too, but our company's valuation stayed pretty flat for the first few years. By the time the value started significantly increasing, I'd already vested a good chunk at a low valuation. Just make sure you're prepared for the tax bills at each vesting event. Some companies will let you sell enough shares to cover the taxes, but at a private startup, that's trickier. You might need to set aside cash from your regular salary.

Does anyone know if you need to do 83(b) elections for every grant? I filed one when I first joined my startup but then got an additional grant last month. Do I need to file another 83(b) for the new grant?

I feel your pain - this is such a common mistake with startup equity! The good news is that you haven't actually violated any tax rules, you just missed out on a valuable tax planning opportunity. Since your equity had a $0.00 FMV at grant, you would have owed essentially no tax if you'd filed the 83(b) election. Now you'll pay ordinary income tax on the fair market value at each vesting date instead. This could be significant if your company's valuation has increased since January 2024. One practical tip: start setting aside cash now for the tax bills that will come with each vesting event. If your startup doesn't allow share sales to cover taxes (which is common for private companies), you'll need to pay these taxes out of pocket from your regular salary. Consider talking to a tax professional who specializes in equity compensation to help you plan for the upcoming vesting dates and estimate what you might owe. The silver lining is that your cost basis will be stepped up to the FMV at each vesting date, so you won't face double taxation when you eventually sell the shares.