8832 Form: Guide to Tax Classification for Your Entity

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 US LLCs, including the steps for opening 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

  1. 8832 Form
  2. Who Is Responsible for Filing Form 8832?
  3. How to File Forms With the IRS
  4. Frequently Asked Questions
  5. Do You Want Help Opening Bank Accounts?

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 β€œticking 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,Β  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.

How to File Forms With the IRS

The process to file forms with the IRS does depend 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 status within the United States.

Frequently Asked Questions

Below are a few 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 for changing 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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GlobalBanks Team
GlobalBanks Team

The GlobalBanks editorial team comprises a group of subject-matter experts from across the banking world, including former bankers, analysts, investors, and entrepreneurs. All have in-depth knowledge and experience in various aspects of international banking. In particular, they have expertise in banking for foreigners, non-residents, and both foreign and offshore companies.

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