The EIN and IRS forms · A term for founders abroad
What is Form 8832?
entity classification election. The IRS form an LLC files to be taxed as a corporation instead of as a disregarded entity or partnership; rarely what a foreign owner wants.
Checked against the IRS's instructions and the states' own rules. Reviewed by Saais Patel, compliance reviewer.
Term 48 of 105 in the glossary, filed under F.IRS: limited liability company
Form 8832, for a founder abroad.
An LLC's default tax treatment depends on how many members it has: one makes it a disregarded entity, two or more a partnership. Form 8832 lets it elect to be taxed as a corporation instead, after which it files Form 1120 and pays 21% corporate tax.
Some foreign owners make the election on advice about how their home country treats an LLC; most don't. After an election, the company generally can't change its classification again for five years.
Sources: IRS: limited liability company.
Read next · guide · 3 minMulti-member LLC taxes: Form 1065, the K-1, and what changes with two ownersWhat founders ask next.
- Should my foreign-owned LLC elect to be taxed as a corporation?
- Usually not: it adds 21% US tax that a disregarded LLC run from abroad doesn't pay. It can make sense where your home country taxes a disregarded LLC badly, so take advice there first.
- Is Form 8832 how an LLC becomes an S-Corporation?
- No. A non-resident can't own an S-Corporation, and the S election is Form 2553.
03 · See also
- US tax for an owner abroadDisregarded entityA single-member LLC the IRS ignores for income tax, treating its income as the owner's; it still files Form 5472 if the owner is foreign.Read the term
- The company itselfC-CorporationA US corporation taxed on its own profit, which issues stock and is what US investors' paperwork assumes; usually formed in Delaware.Read the term
- The EIN and IRS formsForm 1120The US corporate income tax return, filed yearly by a C-Corporation and, as a pro forma version, by a foreign-owned single-member LLC.Read the term
- The EIN and IRS formsEINThe nine-digit tax number the IRS assigns to a business, and the first thing every US bank, payment processor and marketplace asks for.Read the term
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