8832 Form 2022 Printable, Fillable PDF – When it comes to paying taxes in the United States, various corporate organizations must adhere to different standards. Fortunately, certain domestic and international enterprises may utilize 8832 Form to direct the Internal Revenue Service on how to classify them for tax reasons. Depending on the specifics of your company, this might provide you with a number of advantages.
So, what exactly is 8832 Form, and how does it function? Here’s all you need to know about the situation.
What Is the Purpose Of Form 8832?
8832 Form, Entity Classification Election, is a tax form that enables some firms to choose whether they wish to be taxed as one of the following types of entities:
A C corporation is a kind of corporation.
Entity Who Isn’t Taken Into Consideration
Without using 8832 Form to make an election, the IRS will tax you according to your default entity classification, and you may end up paying more than you should. You may, on the other hand, be able to save thousands of dollars each year if you make the appropriate choice.
This may also be beneficial in terms of protecting your own cash.
For example, a single-member limited liability company (LLC) is treated as a disregarded entity by default, but a multi-member limited liability company is taxed as a partnership. In both circumstances, the members of the LLC will be accountable for the taxes owed by the firm on their personal income tax returns. Many LLC members want to be taxed as C Corporations in order to avoid this since it prevents the revenues and losses of the firm from “flowing over” to their personal accounts.
Of course, if you’re OK with the default entity tax status of your company, you won’t have to bother with 8832 Form.
(Please keep in mind that 8832 Form is not utilized to elect to be taxed as an S Corporation.) Instead, you’ll need to submit IRS Form 2553, which is more specific.)
Who Is Required To File Form 8832?
This form is not required for anybody to complete. It only provides qualifying firms with the opportunity to alter their entity categorization if they so desire, without imposing additional requirements.
So, who is qualified to submit 8832 Form and under what circumstances? The following is a broad list:
- Domestic partnerships are a kind of relationship that takes place inside a household.
- Domestic Limited Liability Corporations (LLCs)
- Partnerships with foreign partners
- Foreign Limited Liability Companies (LLCs)
- Corporations from other countries (in certain jurisdictions)
- Foreign firms with a majority stake in the United States (in certain jurisdictions)
8832 Form is frequently unavailable to domestic businesses, as well as international corporations listed in IRS Regulations 301.7701-2(b)(8).
For further information, see the IRS’s 8832 Form instructions, which are available online.
When Is The Due Date For Form 8832?
Tax deadlines for enterprises are sometimes quite stringent. However, since 8832 Form isn’t required, there isn’t a specific date for submitting it. The application may be submitted at any time throughout the life of a qualifying company. Whether you’re running a brand new firm or one that’s been in operation for decades, you have the option to modify the entity classification of your organization.
However, there are several fundamental principles that should be understood. When submitting 8832 Form, you may specify the date on which the modification will take effect. This date must fall inside a certain window, which is as follows:
- You have up to 75 days before you have to submit the paperwork.
- You have up to one year from the day you submit the paperwork.
You may get assistance from an accountant in determining the most appropriate effective date to provide on your entity classification election form. There is often some element of strategy involved, and making the proper decision might help you reduce your tax liability.
The IRS will recognize your entity election after it has been accepted, and your new categorization will stay in effect forever. There is no need to submit 8832 Form a second time unless you wish to modify the entity classification of your business once again.
However, in most circumstances, you may only alter your classification once every five years, which means you may have to wait a while before changing your classification. A few exceptions do exist, so check with your accountant to determine whether you may make another election before the five-year period expires on your current one.
Is Form 8832 Difficult To Fill Out?
No, this is not a very difficult form to complete. All you need to know is the following information to finish it:
- The company’s name
- The company’s physical address
- Phone number for the business
- A unique identifier for your company (EIN)
When it comes to estimating how long it will take to file, the IRS provides the following time estimates:
- Two hours and 46 minutes were spent keeping track of everything.
- Learning about the legislation or the form will take around 3 hours and 48 minutes.
- Preparing and mailing the paperwork to the Internal Revenue Service took 36 minutes.
Furthermore, if you wish to be taxed as a corporation, you’ll need to submit articles of incorporation with your secretary of state before completing 8832 Form, which adds even another layer of complexity to the process.
The good news is that by employing an expert accountant, you will be able to delegate the paperwork (as well as the problems) to a third party. This allows you to devote your time and energy to activities that are more important to your company and personal life.
What Is The Proper Way To Complete Form 8832?
If you’ve made the decision that you want to alter the entity classification for your company, there are just a few simple tasks you need to complete.
First, go through the IRS instructions for 8832 Form and collect the information you’ll need to fill it out properly. Then, go to the IRS website and get the appropriate form.
Fill out the form’s top section with your company’s essential information, such as its name, address, and EIN number (if applicable).
This will take you to the first section of the book, Election Information. Fill it out if you wish to specify how you want your company to be taxed.
In Part 2, you will only need Late Election Relief if you intend to select an effective date that is more than 75 days before the deadline for your filing. Use this box to request that the IRS make an exception to their regular timeline for processing your tax return. If you do not need an exception, you may be able to skip Part 2 completely.
Finally, sign the paper with the required signature (or signatures) and mail it to the Internal Revenue Service (IRS). For those of you who reside in the United States, you’ll send your package to either Kansas City, Missouri, or Ogden, Utah, depending on which state you live in. More information may be found here.
However, if you are an expat residing in a foreign country—or a US territory such as Puerto Rico—you will need to submit the form to the following address:
The Treasury Department (also known as the Department of the Treasury)
The Internal Revenue Service (sometimes known as the I.R.S.)
84201-0023 Ogden, Utah (Utah)
Once you’ve submitted the form, all you have to do is sit back and wait for a response. Within 60 days, you should get a notice from the IRS indicating whether your request to modify your status has been approved or denied. To find out whether your form has been received by the IRS after 60 days, you may phone them at 1-800-829-0115 or write a letter to the service center in question.
That’s all there is to it! You’re ready to go. To ensure that your entity classification is approved, just include a copy of the form with your US federal income tax return for the year in which it becomes effective, and you’ll be good to go.