Form 8832 Meaning | When and Where to File Form 8832?

What is Form 8832?

The “Entity classification election” form, also known as Form 8832 (Entity Classification), allows businesses to choose how they want to be classified for federal income tax purposes. All eligible entities that want to change or confirm their classification must file this form with the Internal Revenue Service.

Key Points About Form 8832:

Purpose:

Form 8832 allows eligible businesses to select their tax classification. This can have a significant impact on their tax obligations and the rates of taxation applied to their income.

Eligible Entities:

Domestic Entities: Limited Liability Companies, partnerships, and corporations.
Foreign Entities: Certain foreign businesses operating in the U.S.

Classification Options:

Corporation: The entity may choose to be classified as an organization.
Partnership: Entities with more than one partner can be treated as partnerships.
Entity Disregarded: Single-member LLCs may choose to be taxed as a separate entity from their owners. This can lead to taxation that is similar to that of a sole proprietorship.

Default Classifications:

A single-member LLC will be classified as disregarded unless it elects to be treated like a corporation.
An LLC with multiple members is treated as a partnership unless it elects to be treated as a corporation.
A company is automatically classified as a corporation. It does not have to file Form 8832 unless they want to change classification.

Effective Date:

The form must include the desired date for the election to take effect. The effective date is generally 75 days before or 12 months after the date the form was filed.

Filing Requirements:

A representative authorized by the entity (such as an officer or a member) must sign the form.
Form 8832 should be sent to the IRS address as specified in the instructions.

Consequences of the Election:

The classification of an entity affects the taxation of the entity, the tax forms that it must submit, and the taxation of its owners or members on the income of the entity.

Re-Election Restrictions:

Once a classification is chosen, an entity cannot change it for at least five years. This applies only if there has been a significant change in circumstances.

Form 8832 allows business owners to manage their tax obligations strategically based on their business structure and financial goals. Before filing Form 8832, it is best to consult a tax expert to make sure the classification chosen aligns with your business’s requirements.

When to File Form 8832?

When an eligible entity wishes to alter its default tax classification or confirm a different classification for federal tax purposes, it should file Form 8832. The form must be submitted within 75 days of the desired election date or up to 12 months after that date.

Where to File Form 8832?

Mail Form 8832 to the IRS address listed in the instructions. The address varies depending on the entity’s location.

Where to Mail Form 8832?

Send Form 8832 by mail to the IRS. The address is listed on the form instructions and depends on where the principal office of the entity is located.

How to File Form 8832?

To file Form 8832:

Print the Form: Form 8832 can be obtained from the IRS or tax professionals.
Complete the Form: Fill out the entity’s name, address, employer identification number (EIN), and current and desired tax classification.
Indicate the Effective Date: Indicate when you want the change to take effect.
Date and Sign: Make sure the form has been signed and dated.
Send the Form: Mail the completed form according to the instructions provided on the form.
Save a Copy: Keep a copy for your records.