Form 8832 is the IRS form that a Limited Liability Company (LLC) must submit to be taxed as a C Corporation. Depending on your business entity, you might be able to use IRS Form 8832 to elect how you would prefer your business to be classified for federal tax purposes.
Without filing out this application form, your business will defer to its default tax status. And also use Form 8832 to go back to being taxed as a sole proprietorship or partnership. If you do not, you will receive the default tax treatment for your type of business. Take a look at our Form 8832 instructions and FAQs to figure out whether your business is eligible to complete IRS Form 8832.
Below you will find step-by-step instructions for filing Form 8832, as well as some frequently asked questions that most business owners have in common and seek answers for.
Enter your business information
The first section requests pretty basic information about your business, such as:
(a) Name of eligible entity making election Put your business name here, not your actual name. You are filling out this form as a representative of your business.
(b)EIN or Tax ID number This is your EIN. You must have one to complete the form. If you are in the process of applying for an EIN, do not put “Applied for”. Instead, wait until you have received your EIN and then complete the form. You cannot use your Social Security number in place of an EIN on Form 8832.
(c) Address information: Put your business’ mailing address. This is where you will receive correspondence from the IRS regarding Form 8832.
(d) Check if:
(i) Address change: Check the box if you have changed your address since applying for an EIN or filing your most recent return.
(ii) Late-classification relief sought under Revenue Procedure 2009-41 Check here if you are requesting late election relief under Rev. Proc. 2009-41. Means you qualify to file your classification lately. You will probably know if you need to check this because you have thoroughly researched late classification relief, or you have spoken to a lawyer.
(iii) Relief for a late change of entity classification election sought under Revenue Procedure 2010-32: Check here if you are requesting late election relief under Rev. Proc. 2010-32. Again, you will probably already know if you need to check this box.
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Choose your previous elections (If you checked box a in the previous question, skip to step 3).
These questions help the IRS determine if you are eligible to change your tax classification. Generally, if you have already adjusted your tax classification once, you are not allowed to do it again for 60 months (which is five years).
There are many exceptions to the 60-month limitation rule. You can change your tax classification early if you select your election when you formed your entity and it went into effect on your formation date, or if more than 50% of your business’ owners have changed since the last tax election.
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Enter your ownership information:
(a) Enter the name of the owner (that is usually you).
(b) Enter the Social Security number, tax identification number, or EIN of the owner listed on line (a).
(a) If your business is operated by a group of companies that are all under one parent company, then list the parent company’s name here.
(b) Enter the EIN of the parent company.
Add your election information
Here is where you tell the IRS which tax classification you are changing to.
(a) Check here if you’re a US business that wants to be taxed as a corporation.
(b) Check here if you’re a US business that wants to be taxed as a partnership.
(c) Check here if you’re a US business that wants to be taxed as a sole proprietor.
(d) Check here if you’re a foreign business that wants to be taxed as a corporation.
(e) Check here if you’re a foreign business that wants to be taxed as a partnership.
(f) Check here if you’re a foreign business that wants to be taxed as a sole proprietor.
If you are a foreign business, enter the name of the country where your business was formed. If you are a US-based business, then you can skip this line.
Put the date that you want your new tax classification to start. Remember, you can’t enter a date more than 75 days before the form’s filing date or 12 months after the form’s filing date. If you leave this line blank, the starting date will be the date you fill the form.
Fill the name, title and phone number of the contact person. This is probably you.
Read and sign the consent statement
To file Form 8832, you must have an authorised signature from one or more of the following people:
If you are applying for your tax election more than 75 days after you want your election to begin (like our April 1 example earlier), then you can apply for late-election relief. If granted, the IRS will let your tax election to start on the date indicated on Form 8832.
And that is it! You have successfully filled out Form 8832 and you are now on your way to the tax classification that makes the most sense for your business.
Most Common FAQs About Form 8832 for Business Owners
Below are some of the commonly asked questions about Form 8832 by business owners.
Form 8832 is used to send notification to the IRS about the change in the classification of your business entity. It is sometimes known as Form 8832 Late Election Relief.
You can download and access a print-friendly version of form 8832 in PDF format from the IRS.
There are detailed Form 8832 with filing instructions on page 6. The official 8832 form instructions must eliminate confusion that you may have when filling out the form. The IRS 8832 instructions are presented in detailed ways, so they should address any questions that come up while you are completing the paperwork.
You have to file Form 8832 if you want your small business or set up LLC to be taxed as a different kind of company, such as a corporation or S Corp.
You can file the completed Form 8832 with the IRS Service Center for your state. You should also send a copy of the form along with your next business tax return.
You will need to attach a copy of Form 8832 to your federal income tax return the year you make the election.
Partnerships, single-member LLCs and multiple-member LLCs have eligibility to file Form 8832. If your business is classified as one of these entities and you want to change your tax classification, then Form 8832 is for you.
Types of foreign entities, which are listed on Page 5 of Form 8832 under the section titled, “Who Must File,” are also eligible to file this form. Form 8832 can be used by LLCs currently taxed as corporations that want to revert back to a previous tax classification, like sole proprietors.
If you select not to file Form 8832, the IRS will treat your single-member LLC as a disregarded entity and tax you as a sole proprietorship.
If you are a sole proprietor, you are not eligible to fill out Form 8832. To change how you are taxed, you will need to form an LLC first.
If you are an LLC who wants to be taxed as an S-Corp, then you do not need Form 8832 at all. Instead, you will file the much simpler Form 2553.
If you are a corporation that wants to be taxed as an LLC, you also will not file Form 8832. Instead, you will need to check with your secretary of state office about how to convert your corporation to another legal entity.
Each member of the electing business who is an owner at the time of the election, or any manager, officer, or member of the business who is legally authorized to make the election, must sign Form 8832.
The IRS has a resource page elaborating the rules for late election relief.
The IRS will notify your business of acceptance or non-acceptance within 60 days of the form being filed. Just fill out the form according to the instructions for 8832 to make sure that there are no delays.
If your application for late election is approved and you qualify for late election relief 8832, your business can be reclassified and you can file your taxes as a different type of business entity.
You can fill out Form 8832. However, you want to be strategic about when you file the form and when your new tax classification kicks in. Your new tax classification cannot start more than 75 days before the filing date on Form 8832.
That means if you file Form 8832 on April 1, your new tax election will take effect Jan. 15. Your new tax classification also cannot start more than one year after you file Form 8832.
So, if you are an epic planner and want your new tax classification to start January 1, 2021, for instance, then you will have to slow your roll and wait to file Form 8832 on January 1, 2020.
Form 8832 is used by partnerships and LLCs if they want to alter their default tax classification and be taxed as different kinds of companies, such as a corporation. Form 2553 is for conventional corporations to elect S corporation status, specifically.
Form 8832 is the document LLCs submit to the IRS to change their default tax classification. Most commonly, it is used if you want your LLC to be taxed as a C corporation.
Depending on your financial situation, changing your tax classification can lower your total tax bill. That is because different entities are taxed in different ways. Just for example, sole proprietors are subject to different taxes than C-corps.
Many business owners do not realise that the IRS assigns every new LLC a default tax classification. In the eyes of the IRS, an LLC is considered a disregarded entity, which means that while it is recognised as a legal entity by your state, the IRS does not recognize it as a taxable entity.
However, if you are still getting taxed, then, that is because the IRS has assigned your LLC a default tax classification. If you are a single-member LLC, you will automatically be taxed as a sole proprietor. If you are a multiple-member LLC, you will automatically be taxed as a partnership. That is, of course, unless you request otherwise. And that is where Form 8832 comes in.
There is no specific document that the IRS requires for businesses to revoke S-Corporation status. What most businesses do is sending a letter to the IRS stating that they wish to revoke their S-Corporation status. Then, you would file federal income tax returns based on on the type of business you would like to be. file your taxes as a C-Corporation using Form 1120, or file as an LLC using Form 1065 and Schedule K-1. Obey your state rules for filing state tax returns.
Form 8832 is the IRS form that an LLC must use to change its federal tax classification. If you want to switch tax classifications for your business or your accountant advises you to do so, you will need to fill out this form. Luckily, he Form 8832 instructions this article will make the process easier and faster for you.