Form 8832 - Entity Classification

In this guide about Form 8832 you’ll learn:

  • What Form 8832 is and the importance behind it
  • Who should be filing Form 8832
  • When you should file
  • Where do you file

An eligible entity uses Form 8832 to elect how it will be classified for federal tax purposes, as either a corporation, a partnership, or an entity disregarded as separate from its owner.

If an entity classification is not filed with the IRS, there are certain default rules under which the business will fall. The key for the default classification is whether a member has limited liability.

If the foreign entity has two or more members and at least one member does not have limited liability, the default is to be classified as a partnership. If all of the members of the foreign entity have limited liability, the default is for the entity to be treated as an association and taxable as a corporation.

Lastly, if the entity has one single owner, and that owner does not have limited liability with respect to that entity, the entity by default will be a disregarded entity for U.S. taxation purposes.

If you're an LLC or partnership, use Form 8832 if you want to be taxed as a C-corp, partnership, or sole proprietor. Meanwhile, Form 2553 is for LLCs or corporations that want to be taxed as S-corps.

Keep this in mind: If you're filing Form 2553, you don't need to file Form 8832.

Who should file this?

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.

When should you file it?

Form 8832 must be filed between one year prior and 75 days after its effective date. Most LLCs want their Form 8832 to be effective for their first tax year, so the form must be filed no sooner than one year and no later than 75 days after beginning business.

Where to file Form 8832?

File Form 8832 with the Internal Revenue Service Center for your state listed later. In addition, attach a copy of Form 8832 to the entity's federal tax or information return for the tax year of the election.

Jumpstart also offers a hassle-free service where we classify your entity tax status as a corporation, partnership, or disregarded entity, so you don’t have to.

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