Form 8832: Entity Classification Election

Form 8832 is generally used by eligible business entities to elect how they are classified for federal tax purposes.

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Introduction

Form 8832, Entity Classification Election, is a federal tax form generally used by certain eligible business entities to elect their classification for federal tax purposes. The form allows an eligible entity to choose how it will be treated for federal tax reporting.

This guide provides general information about Form 8832, including who may use the form, the information commonly needed, and the basic process for completing it. The information is intended to provide a simple overview of Form 8832 and its general purpose.

What Is Form 8832?

Form 8832 is generally used by an eligible business entity to elect its federal tax classification. Depending on the entity and the election made, an entity may generally be treated as a corporation, partnership, or disregarded entity for federal tax purposes.

The classification selected on Form 8832 can affect how the entity reports its income, deductions, gains, losses, and other applicable tax information. The election may also affect the federal tax return that the entity is generally required to file.

Who Uses Form 8832?

Form 8832 is generally used by eligible business entities that want to elect or change their federal tax classification. The form may be relevant to certain domestic and foreign eligible entities that are permitted to make an entity classification election.

The eligibility requirements can depend on the entity’s legal structure, ownership, current classification, and other applicable circumstances. Not every business entity is eligible to make an election using Form 8832.

What Information Is Needed?

The information needed to complete Form 8832 generally comes from the entity’s legal, ownership, business, and tax records. Accurate information can help ensure that the election properly identifies the entity and the classification being selected.

Common information includes:

Entity name
Entity address
Employer identification number
Entity type
State or other jurisdiction of organization
Date the entity was formed
Current federal tax classification
Requested federal tax classification
Effective date of the election
Ownership information
Owner identification information
Responsible party information when applicable
Supporting legal and tax records

The specific information required may depend on the entity’s ownership, legal structure, current classification, requested classification, effective date, and other applicable circumstances.

How to Fill Out/Complete Form 8832

Form 8832 is generally completed by identifying the entity, providing information about its current classification, selecting the requested federal tax classification, providing applicable ownership information, and identifying the effective date of the election.

The basic process is to gather the entity’s legal and tax records, enter the entity information, identify the applicable classification, select the requested classification, provide the required ownership information, review the effective date, and review the completed Form 8832 before submitting it. The entity should retain a copy of the completed election and supporting records.

Section 1

Enter the entity’s identifying information. This generally includes the entity name, address, employer identification number, and other applicable identifying information.

The information should be reviewed carefully to make sure it is accurate and consistent with the entity’s legal, business, ownership, and tax records.

Section 2

Identify the entity’s current federal tax classification and provide the applicable information requested about the entity.

The classification information should generally agree with the entity’s existing federal tax treatment and available tax records. The entity should review the information carefully before selecting a different classification.

Section 3

Select the requested federal tax classification for the entity. The available classification choices generally depend on the entity’s eligibility and applicable federal tax rules.

The selected classification should reflect the entity’s intended federal tax treatment. The entity should consider its legal structure, ownership, business activities, and applicable tax requirements when completing this portion of Form 8832.

Section 4

Enter the effective date of the entity classification election. The effective date generally identifies when the selected federal tax classification is intended to apply.

The effective date should be reviewed carefully to make sure it agrees with the entity’s records and intended tax treatment. Applicable timing requirements can affect when an election is effective.

Section 5

Provide applicable ownership and responsible party information requested by Form 8832. This information may include information about the entity’s owners or other individuals associated with the election.

The information should generally be based on the entity’s ownership records, organizational documents, and other applicable records. The entity should review the information for accuracy before submitting the election.

Section 6

Complete any additional information requested by Form 8832 that applies to the entity and its classification election.

Only information that applies to the entity should generally be included. Supporting legal, ownership, accounting, and tax records should be retained with the entity’s records.

Final Review

Review Form 8832 after completing all applicable sections. Check the entity information, employer identification number, current classification, requested classification, effective date, ownership information, and other information entered on the election.

A final review can help identify incorrect or incomplete information before Form 8832 is submitted. The entity should retain a copy of Form 8832, supporting legal documents, ownership records, accounting records, and applicable tax records with its files.

Common Mistakes

Common Form 8832 mistakes may include entering an incorrect employer identification number, providing incorrect entity information, selecting an inappropriate classification, or entering an incorrect effective date. Errors involving ownership information or the entity’s current federal tax classification can also affect the election.

Other mistakes may include failing to complete required information, overlooking applicable eligibility requirements, using information that does not agree with the entity’s records, misunderstanding the effect of the classification election, or failing to retain a copy of the completed election. Reviewing Form 8832 and the entity’s supporting records before submission can help identify potential errors.

Related IRS Forms

Businesses and other entities may encounter additional federal tax forms when reporting their income, ownership, employment taxes, elections, and other applicable federal tax information. Different forms are generally used for different types of tax reporting and entity requirements.

Common related forms include:

Form 1065 for certain partnership income tax reporting
Form 1120 for certain corporate income tax reporting
Form 1120-S for certain S corporation tax reporting
Form 1041 for certain estate and trust income tax reporting
Form 2553 for certain S corporation elections
Form 941 for certain employment tax reporting
Schedule K-1 for reporting applicable information to partners, shareholders, or beneficiaries

The appropriate form depends on the entity’s federal tax classification, ownership, business activities, income, expenses, elections, and other applicable circumstances.

Where to File or Submit

Form 8832 is generally submitted according to the filing requirements that apply to the entity and its classification election. The applicable submission process can depend on the entity’s circumstances, the type of election being made, and other applicable requirements.

The entity should review the applicable filing requirements before submitting Form 8832. A copy of the completed election and supporting legal, ownership, accounting, and tax records should generally be retained for the entity’s files.

Current IRS Form & Instructions

Entities should use the applicable version of Form 8832 and its instructions when preparing an entity classification election. Federal tax forms and requirements can change, so the version used should correspond with the applicable filing circumstances.

Before submitting Form 8832, the entity should review the form and instructions and confirm that the information entered agrees with its legal, ownership, accounting, and tax records. This can help identify potential errors before the election is submitted.

Important Information / Disclaimer

This Form 8832 guide is provided for general informational purposes only and is intended to provide a basic overview of Form 8832 and common information associated with making an entity classification election. This information is not tax, legal, accounting, or financial advice, and Form 8832 requirements can vary depending on the entity, ownership, classification, election, effective date, and other applicable circumstances.

Entities are responsible for determining their applicable filing, tax, recordkeeping, and reporting requirements. The information on this page may not cover every situation, exception, or special rule that may apply. When appropriate, entities should consider seeking assistance from a qualified tax professional or other qualified advisor regarding their specific entity classification, tax treatment, filing requirements, or Form 8832 election.