8832 Form refers to an important U.S. tax form that allows the owners of U.S. companies to select how their entity will be treated for tax purposes.
In this article, we’re going to explore Form 8832 in detail and share who should file, how to file, and answer important questions on the topic.
This article is part of our free series on setting up a US LLC and how to open a business bank account for an LLC, which you can access here
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- 8832 Form
- Who Is Responsible for Filing Form 8832?
- How to File Forms With the IRS
- Frequently Asked Questions
- Ready to Open Accounts With Banks in the USA
8832 Form
Form 8832 is a U.S. tax form allowing for entity classification election. In other words, the owners of a legal entity in the United States can inform the IRS that they want their company treated as a corporation, partnership, or as an entity disregarded from its owner.
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Who Is Responsible for Filing Form 8832?
Filing Form 8832 is not a requirement unless the owner of the entity wishes for the entity to be treated differently for tax purposes. Therefore, the responsibility for filing Form 8832 falls on the shoulders of the owner, if they wish to change classification.
Limited Liability Company (LLC)
For example, a Limited Liability Company (LLC) can elect to be treated as a corporation instead of a pass-through entity by submitting Form 8832 and “ticking the box” to elect for treatment as a corporation.
Small Business Owners
Small business owners of a limited liability company (LLC), with at least two members, are automatically the owners of an entity that is classified as a pass-through entity. However, it is possible for personal or business reasons that they would prefer the entity to be classified as a corporation. To elect for this tax treatment, the owners would need to ensure that Form 8832 was submitted in order for this treatment to be applied.
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How to File Forms With the IRS
The process to file forms with the IRS, whether it’s Form 5472 or Form 8832, depends on the specific forms in question and the individual filing the form. For example, certain forms may be filed by mail or electronically. However, electronic filing may only be available to certain individuals and tax statuses within the United States.
Frequently Asked Questions
Below are four of the most common questions we receive from people looking into how to file Form 8832 If you have further questions you would like to ask our team, don’t hesitate to get in touch.
What Is Form 8832 Used For?
Form 8832 is used to change the way the federal government treats an entity for federal tax purposes. The available treatment will vary depending on the entity. However, the available options included a corporation, a partnership, and an entity disregarded from its owner.
Why Should an LLC File Form 8832?
An LLC should only file Form 8832 if it would like to elect for a different tax classification than the one assigned at formation. Alternatively, in certain instances, an LLC can also change its classification. This is true even if it has existed as a disregarded entity for several years.
What Happens If an LLC Does Not File Form 8832?
If an LLC that has a single member does not file form 8832, what happens next is that it will maintain its status as a disregarded entity for tax purposes in the eyes of the Internal Revenue Service (IRS). With this in mind, if a single member of an LLC would like for treatment as a corporation, they will file Form 8832 with the IRS.
Should I File Form 8832 for Single Member LLC?
Whether you should file form 8832 for a single-member LLC depends. In particular, it depends on how you would like your LLC to be treated for taxes. In other words, do you want the LLC to be treated as a disregarded entity? Or, do you want it to be treated as a corporation for tax purposes? If you want it to be treated as a corporation, you will need to elect this treatment.
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