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As much as starting a business (and running it) involves creativity, grit, and great ideas, it also involves business accounting and some pretty tedious paperwork, especially around tax season. This also involves knowing which tax forms your business is able to file, including IRS Form 8832.
Depending on your business entity, you might be able to use IRS Form 8832 to elect how you’d prefer your business to be classified for federal tax purposes. Without filling out this form, your business will defer to its default tax status.
If that sounds like gibberish to you, don’t worry: Take a look through our Form 8832 instructions and FAQs to figure out whether your business is eligible to complete IRS Form 8832 and, if so, what you’ll need to complete it, how to fill it out, and more.
The bottom line: IRS Form 8832 can affect your bottom line.
If you don’t fill out Form 8832, also called the Entity Classification Election, your business will be given a default tax classification—which may result in you paying more taxes than you really need to. If you choose wisely (with the help of your business accountant), changing your tax election status can potentially save you thousands of dollars per year.
A business entity that typically fills out and files IRS Form 8832 is an LLC that wants to be taxed as a C-corporation. Normally, a single-person LLC would be taxed as a disregarded entity, while a multi-member LLC is taxed as a partnership. Filling out IRS Form 8832 allows you to change your business’s tax status so that the profits and losses of the business are not passed on to your individual income tax returns. Rather, you will pay corporate income taxes instead.
Only eligible businesses, including U.S.-based partnerships, U.S.-based limited liability companies (LLCs), and certain foreign entities can file IRS Form 8832 to elect to be taxed as a C-corporation, a partnership, or a sole proprietorship. Single-member and multi-member LLCs can fill out Form 8832 if they’d like to be taxed as a C-corporation, a partnership, or a sole proprietorship. Without filling out this form, single-member LLCs are taxed as sole proprietorships by default, and multi-member LLCs will be taxed as partnerships.
Of course, if you’re happy with your default tax status, there’s no need to file IRS Form 8832. This form is only for businesses that want to change their tax status. And while IRS Form 8832 can be used to change your tax classification to a C-corp, you will need to file a separate document, IRS Form 2553, if you want to be taxed as an S-corporation.
Heads up: If you want to be taxed as a corporation, you need to file articles of incorporation with your secretary of state first and then file IRS Form 8832.
The good news is, you don’t need to prepare too much information to fill out IRS Form 8832. You’ll need:
Now that we know who should file IRS Form 8832 and why, let’s dive into Form 8832 instructions so you know exactly how to fill out this form to change your tax status.
You can find IRS Form 8832 on the IRS website along with some other resources that might be helpful for you. The first page of the form has information about where to mail your tax forms depending on what state your business is in. Page two is where the actual form begins and you’ll begin filling out information about your business.
Once you download the form, you can begin filling out your basic business information before Part 1 either on the computer or by hand. Keep in mind that filling them out by hand can more easily lead to errors, so it’s a good idea to use a computer to complete Form 8832. This section asks for simple information about your business, including your business name, address, and EIN.
If you don’t have an EIN you can apply for an employer identification number easily and quickly online, you can get one in a matter of minutes so don’t worry if you don’t have one. If you do have one but can’t remember what it is, look for your EIN confirmation letter that you got when you applied for one. You can also find this number on old tax returns or on business permits and licenses.
Be sure to check one of the boxes below this information if necessary. If you’ve changed your business address after filing form SS-4 or your most recent returns check “Address change.” If you forgot to file the form but want the change to apply to previous tax years, check the “Late classification relief…” box.
Part 1 of IRS Form 8832 asks a series of questions regarding your tax status election. You may not need to complete every question, depending on your answers. Line 1 determines whether you are filing to change your tax status for the first time (a) or if this is a subsequent change (b). If this is not the first time you are changing your business’s tax status, you’ll complete lines 2a and 2b surrounding the timeline of your last election. The IRS typically limits how frequently you can change your classification to no more than once in a 60-month period. However, if your last election was made when your business was first formed and went into effect on the date of formation, the 60-month limit doesn’t apply.
Next, (and if you selected option “a” in line 1) you’ll move on to line 3, which asks whether your business has more than one owner. Depending on which box you check, you’ll have different tax status options. If you have a solely owned business you can be taxed as a disregarded entity or a C-corporation. Solely owned businesses will move on to line 4 and will enter the owner’s name and identifying number (either a social security number, EIN, or ITIN).
If your business has more than one owner, you can be classified as a partnership or C-corporation. After designating that your business has multple owners, you’ll move on to line 5 and fill out the name and EIN of any parent corporations.
The next line, line 6, is where you’ll choose your desired tax status. Select the appropriate box for your business and desired tax status. Line 7 is only for foreign entities, where they will provide the foreign country of organization. On line 8 you will provide the month, day, and year that you would like your new tax status to take effect. Keep in mind, you won’t be able to provide a date that is more than 75 days prior to the date on which you file; the date can also be no more than 12 months later than the date you file. Note that if you don’t provide a date on line 8, the IRS will input the day on which you filed.
Finally, on lines 9 and 10, you will provide the name and title of someone within your business that the IRS may contact for additional information, as well as their phone number.
Part 2 is only for those who are filing their entity classification election past the deadline. If you don’t file within the time frames mentioned above, you can seek late election relief.
To be eligible for late election relief, you need to fulfill all of the following circumstances:
If these apply to you, explain your circumstances and your reasonable cause in the field provided in Part 2, line 11. You’ll also have to sign here as well.
Once you have IRS Form 8832 fully completed and signed, you should mail it to the appropriate office. The address where you’ll send your form will depend on where your business is located, and this can also be found on the first page of the IRS Form 8832 PDF.
Taxpayers in Connecticut, Delaware, Washington D.C., Georgia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, West Virginia, and Wisconsin will mail their form to:
Department of the Treasury
Internal Revenue Service Center
Kansas City, MO 64999
Those taxpayers in Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Tennessee, Texas, Utah, Washington, and Wyoming will mail their form to:
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201
The IRS will either accept or deny your IRS Form 8832 filing request. They will notify your business within 60 days with their decision. The letter of either acceptance or denial will be mailed to the address you listed when completing your form.
If the 60 days go by and you don’t hear anything, the IRS advises that you call 1-800-829-0115 or that you send a letter to the service center to check on the status of the form. Acceptable proof of filing is either a certified or registered mail receipt from the United States Postal Service; Form 8832 with an accepted stamp; Form 8832 with a stamped IRS received date, or an IRS letter that says the form has been accepted.
If you still have other questions about filing after reading the above Form 8832 instructions, the below FAQs and answers may be able to help. Of course, the IRS or your accountant are also great resources you can consult.
If you don’t have an EIN yet, you can easily apply for an employer identification number for free through the IRS’ website. You will need an EIN to file IRS Form 8832, but there are also additional benefits of getting an EIN.
No. You generally do not need to change your EIN if you switch your tax treatment.
The signature is required in Part 1, line 9. In this section you will provide the name, title, and phone number of the person that the IRS should contact should there be any questions about your form.
Form 8832 should be signed by a business owner, manager, or officer of the business. If the election is going to be active before the date you filed the form, it also needs to be signed by anyone who was an owner during the active period but is no longer an owner.
This would be your tax advisor.
No. You should also attach a copy of the form to your federal income tax return for that year.
The IRS estimates that it takes just 17 minutes to fill out this form, and as you can see from our form 8832 instructions, there aren’t too many questions to address.
No. Businesses that want to be taxed as S-corporations need to fill out IRS Form 2553.
No. All partners within a corporation must be taxed according to the same classification.
There are pros and cons to every type of business entity; each type comes with their own legal and financial implications, as well as their own procedures for setting up. Your safest bet is to consult with your tax advisor before undergoing any elections.
You can fill out this form either:
On the form itself, you’ll indicate which of these circumstances applies to you, and the way in which you fill out the form differs accordingly.
There are a few reasons you might want to change your current tax classification, including:
As always, consult your tax advisor if you’re unsure whether you should change your current tax classification.
Yes. Form 8832 can be filled out at any point during the course of a business’s lifetime. Partnerships and LLCs especially might benefit from filing Form 8832 if they haven’t already, or if they previously filed as a corporation.
There’s no “deadline” to file Form 8832—it can be filed either right when you start your business, or at any point during your business’s lifetime. However, the filing date is important. The tax status for the business is effective either:
You want to select the proper date for your tax classification to begin so that you can be taxed effectively. Ask your accountant for advice on the right effective date—there may be strategies for your type of business in terms of a better effective date.
You can only change your tax status every five years, with a few exceptions. If you’ve changed your tax classification less than five years ago, but you’d like to file Form 8832, ask your accountant if your business suits one of those exceptions.
In Part I, line 5, you’re asked whether your business is owned by one or more parent affiliated (or parent) companies that file a consolidated tax return. If so, you’ll need to provide the name of the parent company and its EIN number. This question is to ensure that all affiliated companies are taxed properly.
Certain entities that were formed in countries outside of the U.S. (or in certain U.S. territories) are eligible to fill out IRS Form 8832. Consult the provided list on the form’s seventh page for a list of those countries.
Unless you specifically fill out IRS Form 8832, the federal government will automatically tax you based on your business entity’s default tax classification. But by completing this form, you can change your tax status—and, potentially, save thousands of dollars every year.
If you’re a single- or multi-member LLC and you’re considering changing your tax status, you can fill out Form 8832. But before launching straight into the form, we highly suggest consulting with your tax professional. Your accountant can guide you through the ins and outs of this form—and whether changing your tax status is the right move for your business in the first place.
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