Form 8832

Form 8832 is an IRS form, officially called Entity Classification Election, that lets eligible business entities choose their own federal tax classification instead of defaulting to the one the IRS assigns automatically. That choice gives companies more control over how their income gets taxed at the federal level.

Picking the right classification can also affect payroll and employee benefits. Companies can reduce employer payroll taxes, optimize retirement and health benefit contributions, and line up their federal tax obligations with how the business actually operates and plans to grow.