If you’re a non-US founder of a US company and you’re living outside the US, you’ll probably hear people say “file an 83(b)” right after you incorporate. A lot of founders jump in without really getting what it is, if it even matters to them, or when they need to have it done by.
This article breaks down what an 83(b) election is, why it might still be a good move even if you’re not living in the US right now, and what you need to do to file it the right way.
Just a heads up, this is general info and not tax advice.
What an 83(b) election is
A Section 83(b) election is a US tax election that applies when you receive equity that is subject to vesting or other restrictions that create a “substantial risk of forfeiture” (for example, founder restricted stock that vests over 4 years).
Without an 83(b) election, the IRS generally treats you as receiving taxable compensation as your equity vests. With an 83(b) election, you choose to recognize (and be taxed on) the value up front, at the time the equity is transferred to you, instead of at vesting. (IRS)
In startups, the reason people file it is simple
- Early on, the equity value is usually low
- Later, if the startup grows, the value at vesting can be much higher
So the election is often used to lock in a low taxable value at the beginning, rather than being taxed as the value increases. (IRS)
When 83(b) is relevant for founders
Most of the time, 83(b) applies in two cases.
Founder restricted stock is subject to vesting
Example: You buy founder shares for a low price, but they become yours over time and can be taken away if you quit.
Early exercise of stock options
For example, if you exercise your options early, the shares that you get are still subject to vesting. If you get shares that give you full rights right away, 83(b) usually doesn’t come into play.
Why it matters even if you live outside the US
Here’s the important part for leaders who don’t live in the US:
If you don’t have to pay US taxes right now, making an 83(b) decision might not change your tax bill.
But it might still be a good idea to file “just in case,” since founder situations change and the bad things that happen when you don’t file are sometimes found out at the worst time.
Some common situations where it might be useful later.
You move to the US later and become a US tax resident
If you later become subject to US tax while your shares are still vesting, the IRS may treat the vesting as taxable compensation at that later (higher) value, if no 83(b) was filed.
This is one of the main reasons many startup lawyers still recommend filing even for non-US founders, if there’s any realistic chance of becoming a US taxpayer later. (Stripe Docs)
You spend more time in the US than expected
Some founders start traveling frequently, manage sales in the US, or become more US-present over time. Your tax residency status can change unexpectedly based on facts and days spent.
You end up with US-connected tax exposure later
For example, you may take a US role, receive US-source compensation, or restructure. Even if you’re outside the US now, future facts can create US tax obligations.
Investors and counsel ask for “clean founder paperwork”
Even when the direct tax impact for a non-US founder is limited, investors and US counsel often expect founders to have done the standard equity hygiene properly. It’s not always a strict dealbreaker by itself, but it can become part of a broader “this team is sloppy” narrative.
Also, the upside of filing can be significant when it does matter
- It can convert future appreciation into capital gains instead of compensation income (in the scenarios where US tax applies) (Cooley GO)
- It can avoid surprise taxable events at vesting, when the company is worth much more
The deadline and when the clock starts
The 83(b) deadline is strict.
It must be filed no later than 30 days after the date the property was transferred. (IRS)
That “transfer” date is usually
- the date you purchased/received restricted stock subject to vesting, or
- the date you early exercised options and received restricted shares
It is not “30 days from incorporation” unless your stock transfer happened on incorporation day.
If day 30 falls on a weekend or legal holiday, it can be timely if postmarked on the next business day. (IRS)
What you can gain from filing
You lock in today’s low value (when the company is cheap)
For early-stage founders, the value at grant is often close to the price paid. That can mean minimal or even zero immediate taxable income in many cases, if US tax applies. (IRS)
You reduce the risk of a big tax hit later
If you don’t file and the company grows, you can end up being taxed on vesting at a much higher value later (again, in any scenario where US tax becomes relevant). (Carta)
You remove uncertainty if your status changes
Non-US founders frequently underestimate how often plans change over 2–5 years. Filing is sometimes treated like a low-cost insurance policy if there’s any chance you become a US taxpayer later. (Stripe Docs)
The tradeoffs and risks you should understand
83(b) is not “always good” in every fact pattern.
The biggest practical risks
You pay tax now and later forfeit the shares
If you file an 83(b) election and later lose the shares (for example, you leave early and unvested shares are repurchased), you generally don’t get to “undo” the election easily. 83(b) elections are generally not revocable without IRS consent. (IRS)
You might pay tax before you have liquidity
If the shares have meaningful value at transfer and you’re subject to US tax, you could owe tax upfront even though you can’t sell the shares. This is why founders usually want the transfer value to be as low as reasonably supportable.
For many early founders, these risks are manageable because the value at grant is usually low. But it’s still something to take seriously.
How to file properly
Today, the IRS has an official form you can use.
Step 1: Confirm you actually have “restricted property”
83(b) generally applies when the equity is substantially nonvested (subject to forfeiture/vesting). (IRS)
Typical founder setup that triggers it
- you purchase founder shares
- the shares vest over time (reverse vesting)
- the company can repurchase unvested shares if you leave
Step 2: Prepare Form 15620 (or a compliant written statement)
The IRS provides Form 15620 as a standardized 83(b) election form. Its use is voluntary, but it’s the cleanest approach for most founders. (IRS)
Step 3: Make sure the content is complete
A valid election needs required information such as your name, address, taxpayer identification number, description of the property, transfer date, restrictions, fair market value at transfer, amount paid, etc. (GovInfo)
A practical non-US founder problem is the TIN (SSN/ITIN). The regulations call for a taxpayer identification number. (GovInfo)
In practice, some advisors recommend filing and putting “applied for” if you don’t yet have an ITIN, but you should treat this as something to confirm with your tax advisor, because details matter and acceptance can vary. (help.clerky.com)
Step 4: File it within 30 days
The IRS instructions for Form 15620 state it must be filed within 30 days after transfer. (IRS)
How to submit
- By mail to the IRS office/service center where you would file your federal income tax return (IRS)
- Online submission may be available through the IRS “mobile-friendly forms” system for forms that support online submission (this is a broader IRS program) (IRS) and multiple law-firm and equity platforms report that Form 15620 can be submitted that way (Sidley Austin)
Because processes can change, the safest approach is
- If you file online, save proof of submission
- Or if you file by mail, use certified mail/courier with tracking and keep evidence of timely mailing
Step 5: Send required copies
Per the Form 15620 instructions, you must also provide a copy to the person/company you’re providing services to, and in some cases to the transferee if different. (IRS)
Step 6: Store the evidence
Keep
- the signed form
- proof of mailing or online submission
- the stock purchase/issuance documents showing the transfer date
This is what matters in diligence later.
Where non-US founders typically mail it
Form 15620 says to file it with the IRS office where you file your federal return. (IRS)
If you’re outside the US and you file as a nonresident (Form 1040-NR), the IRS international “where to file” pages list Austin, TX, for non-payment filings and Charlotte, NC, for filings enclosing payment. (IRS)
In practice, many non-US founders use the address they would use for their 1040-NR filing profile (foreign address, no payment), unless their advisor instructs otherwise.
The one sentence to remember
The 83(b) deadline starts on the date your restricted shares are transferred to you, and you have 30 days from that date. (IRS)
Final thoughts
At first, an 83(b) election may not seem important if you’re a non-US founder of a US company. But it’s actually a small, time-sensitive piece of paperwork that can save you a lot of trouble down the road. Even if you don’t owe US tax right now, things can change.
You could move to the US, spend more time there, or owe US tax in the future. Filing within 30 days of getting limited shares is often seen as a cheap way to protect yourself from a big problem that could happen later.
It’s important to know when your “transfer” date really is, file on time, keep proof, and keep the papers. People don’t always do the right thing, but missing a deadline is one of those mistakes that only hurts when it’s too late. When in question, get quick help from a tax expert who knows a lot about startups or a US lawyer.
