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Fillable Form IRS 8832

An eligible entity uses this form to elect how it will be classified for federal tax purposes, as: a corporation, a partnership, or, an entity disregarded as separate from its owner.

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What is Form 8832 or the Entity Classification Election Form?

When you form a business entity, the Internal Revenue Service (IRS) may automatically assign your entity a “default” tax status. This “default” tax status may differ depending on the type of business you have. However, this tax status may not be appropriate for your business entity; for example, you might be paying more for your taxes, and you are not able to fully utilize your income from your business.
If you would like to maximize your tax savings in your business, you can have your business entity’s tax classification changed. In order to do this, you would have to fill out IRS Form 8832 or the Entity Classification Election Form.

Are there differences in the way business entities are taxed?

The table below shows the basic differences in taxation between entities.

Business Entity

Taxation

Sole proprietor

If you are the sole proprietor of your business, your business is not considered as a separate legal or tax entity. Therefore, you will be taxed at your ordinary income tax rate (pass-through entity).

You only need to file Form 1040 or your Income Tax Return Form. You would have to provide the assets and liabilities of your business on your Form 1040.

Partnership

Like sole proprietorship, it is a pass-through entity. The profits and losses of a partnership entity will be allocated to its owners, and the taxes will be deducted from the owners’ personal income tax.

Limited Liability Company (LLC)

An LLC with one member is automatically taxed as a sole proprietorship.

An LLC with multiple members is automatically taxed as a partnership.

S Corporation

An S Corporation is a pass-through entity. The profits and losses of an S Corporation will be allocated to its shareholders, and the taxes will be deducted from its shareholders. Unlike C Corporations, they do not pay corporate taxes.

C Corporation

A corporation is a separate tax-paying entity, meaning it is completely separated from its owners and is taxed differently.

The profit of a C Corporation is subject to double taxation--one from the corporate income tax, and another one from the individual income taxes of the shareholders.

Since there are differences in the way business entities are taxed, it is important that your business is classified according to its actual type of entity, so that you could get the most out of your income from your business.

This information shows only the basic differences. Kindly read through the form for more information. For an in-depth explanation, please consult a professional for aprropriate advice.

What entities are eligible to file Form 8832?

The entities that are eligible to elect their tax classification are as follows:

  • A domestic entity electing to be classified as an association taxable as a corporation
  • A domestic entity electing to change its current classification (even if it is currently classified under the default rule).
  • A foreign entity that has more than one owner, all owners having limited liability, electing to be classified as a partnership
  • A foreign entity that has at least one owner that does not have limited liability, electing to be classified as an association taxable as a corporation
  • A foreign entity with a single owner having limited liability, electing to be an entity disregarded as an entity separate from its owner
  • A foreign entity electing to change its current classification (even if it is currently classified under the default rule)

You are not required to file Form 8832 if you are any of the following:

  • Sole proprietor. If you’re a sole proprietor, there is no need for you to fill out Form 8832. If you want to change your classification, you would have to file to become an LLC first.
  • An LLC who wants to be taxed as an S-corp. In this instance, you would have to file Form 2553 or the Election by a Small Business Corporation Form.
  • A corporation that wants to be taxed as an LLC. You would have to consult the secretary of state for this matter.

How to fill out Form 8832?

The form has seven pages. Pages 1 to 3 contain the actual form which you need to answer. Pages 4 to 7 contains information about Form 8832 and instructions on how to fill out the sections in the form. The instructions that will be given in this article are simplified. Kindly read pages 4 to 7 of the form for clarifications on the instructions for each item.

Entity Information
Type or print the following information on the space provided

  • Name of eligible entity making election
  • Employer Identification Number
  • Complete address

Below the address part, you are presented with three choices pertaining to the purpose of your application. Check the box that is applicable to you.

  • Address change
  • Late classification relief sought under Revenue Procedure 2009-41
  • Relief for a late change of entity classification election sought under Revenue Procedure 2010-32

Part I: Election Information
Item 1. Type of Election

  • Box a. Check here if you are filing for an initial classification by a newly-formed entity (If you check this, skip lines 2a and 2b and proceed to line 3).
  • Box b. Check here if you are filing for a change in the current classification.

Item 2A. You are asked if you have previously filed an entity election that has an effectivedate within the last 60 months.Check Yes if applicable, and proceed to line 2B.If this is not applicable to you, check No and proceed to item 3.

Item 2B. You are asked if you are a newly-formed entity.Check Yes if the last time you filed for a classification election was for the classification election.

Item 3. You are asked if your entity has more than one owner. Check Yes if applicable.

Item 4. If your entity has only one owner, you are to provide the owner’s name andidentifying number (social security number, tax identification number, or employer’s identification number).

Item 5. If your entity is owned by one or more affiliated corporations, you are to provide thename of the parent corporation and its employer identification number on the spaces provided.

Item 6. You are asked about your current entity classification and what you are planning to select your entity. Check the box that applies.

Item 7. You are asked if your entity is created or organized in a foreign jurisdiction. If so, provide the country where you created or organized your entity in the space provided. If this does not apply to you, leave it blank.

Item 8. Provide here the date you want the election to be effective.

Item 9. Provide here the name and title of a contact person whom the IRS may call for more information about your application.

Item 10. Provide here the telephone number of the contact person you have indicated above.

Consent Statement(s) and Signature(s)
The owner/s of the business entity must consent to the application for an election of entity classification.
Provide your signature on the space provided, as well as the date you signed the form and your title in the organization or business entity. If there are multiple owners of the entity, they must all provide their signatures in this form.

Part II. Late Election Relief
If you are applying for a late election relief, you are required to answer this part of the form. If this is not applicable to you, you may skip this part and leave this unanswered.

Item 11. You are asked to provide an explanation as to why your entity classification election
was not filed on time.
Below Item 11, provide the signature of the business entity’s authorized representative and the persons affected by this classification election to certify that the above explanation is factual. The signatories should be the same people who signed the consent section above.

Where do I submit Form 8832?

You can submit your accomplished Form 8832 by mail. The mailing addresses differ for each state. Visit the IRS website to see where you have to submit your Form 8832.

Note: Remember to keep a copy of your accomplished Form 8832 and attach it to your individual income tax form for the tax year.

Is there a deadline for filing Form 8832?

There is no deadline for filing Form 8832, meaning you can file it anytime. However, you would have to take into consideration the date when you elect a new tax classification for your business.

  • Your new tax classification cannot take effect more than 75 days before the date you filed Form 8832.
  • Your new tax classification cannot take effect later than 12 months after the date the election is filed.

Final Note: This article is not intended as legal or tax advice. Kindly consult a professional for further clarification and appropriate advice.

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