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A tax checklist for startup equity

Use this checklist to avoid missing elections, exercise windows, and tax payments before you have cash to pay.

Rates and rules change. Content is reviewed for tax year 2026. Check the last-reviewed date and methodology on each page, then confirm against IRS or state guidance before you file.

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In plain terms

Startup equity tax is mostly about not missing deadlines and not getting surprised by tax before you have cash. This checklist covers what to do at grant, whether to consider 83(b), and what to prepare before an IPO or acquisition.

How the tax works

Elections like 83(b) are deadline-driven, and missing them is often irreversible.

Exercising options can create tax before there is any way to sell shares.

Different instruments: , , , are taxed at different times and in different ways.

Liquidity events (IPO, tender, acquisition) can create both wage and capital reporting at once.

What to check on your end

  • At grant: confirm the equity type and read the key terms.
  • Early on: decide whether early exercise and 83(b) make sense, and note the strict deadline.
  • Before exercise: estimate the spread and whether or applies.
  • Before a liquidity event: gather basis records and plan for .
  • Year-round: keep a folder of grant docs, exercise confirmations, and 409A notices.

Common mistake

Filing equity paperwork away and forgetting it until tax time. The most expensive startup-equity mistakes are missed elections and exercises done without a cash plan, both avoidable with a simple checklist.

Example scenario (hypothetical)

Illustration only, not your tax situation.

Example: Avery joins a startup, confirms the grant is , evaluates early exercise with 83(b) within the deadline, and keeps every confirmation. When a arrives years later, Avery already has the basis records needed to report it cleanly.

When a CPA is worth it

  • You are deciding on early exercise or 83(b).
  • A liquidity event is approaching.
  • You have a mix of , , and .
  • You are unsure how to organize records.

Sources and notes

Primary tax claims on this page are supported by the official and secondary sources below. Broker and software links describe reporting mechanics — confirm rules against IRS or state guidance.

ISO and NSO exercise timing, AMT on ISO spread, and disposition reporting.

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For learning, not filing

VestingTax.com is not a CPA firm or tax preparer. Grants, employers, and states all differ. Use the cited IRS and state sources above, your own documents, and a qualified tax professional before you make decisions from this guide.

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