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Form 8697: Interest Computation Under the Look-Back Method for Completed Long-Term Contracts
IRS Form 8697 is used to compute interest due or to be refunded under the look‑back method for completed long‑term contracts. Individuals, joint filers, owners of pass‑through entities and other filers must file it by the date their income tax return is due (including extensions).
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IRS Form 8697 - Interest Computation Under the Look-Back Method for Completed Long-Term Contracts
IRS Form 8697 is used to compute interest due or to be refunded under the look‑back method for completed long‑term contracts. Individuals, joint filers, owners of pass‑through entities and other filers must file it by the date their income tax return is due (including extensions).
Risk Radar
Scan points- 1Missing the required signature when a refund is claimed can invalidate the filing.
- 2Failing to file Form 8697 by the tax return due date (including extensions).
- 3Omitting the required signature when a refund is claimed on the form.
- 4Not providing direct‑deposit information on lines 9b‑9d or 10b‑10d when a refund is due.
- 5Entering the adjusted taxable income on corrected Form 8697, Part I line 1, instead of leaving it blank.
Plain English
Form 8697 calculates the interest you owe or that you get back when a long‑term contract is finished and the look‑back method applies. It gathers contract and tax information, then determines the correct interest amount.
Submission Date
- Filing date: 2026-02-10 13:10:35
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when you completed a long‑term contract entered into after February 28 1986 and accounted for it using the percentage‑of‑completion or percentage‑of‑completion‑capitalized‑cost method.
- Do not use it when you have not completed a long‑term contract that meets those criteria.
- Check Form 1065 instead when you are a partnership reporting interest due on line 24 of Form 1065.
Form selector
Use this form or another form?
Partnership reporting interest due on Form 1065
Interest due is entered on line 24 of Form 1065
✓ Ensure check is payable to United States Treasury
Partnership making electronic payment
Use electronic payment options per Instructions for Form 1065
✓ Verify EIN and phone number are correct
S corporation reporting interest due
Interest due is entered on line 23c of Form 1120‑S
✓ Write “From Form 8697” on the dotted line
Deadline or filing window
Form 8697 must be filed when the contracts are completed or adjusted, and the filing deadline matches the due date of your income tax return. The deadline includes any extensions you have for the return. No separate extension period is provided for Form 8697 alone.
Checklist
What you need before filling it out
Part I line 9a
Computed interest refund amount · Form 8697 Part I
Part I lines 9b‑9d
Bank routing, account, and account type · Direct deposit fields on Form 8697
Part II line 10a
Computed interest due amount · Form 8697 Part II
Identifying number (EIN)
Employer Identification Number · Form 8697 header
Taxpayer type box
Selection of corporation, individual, etc. · Form 8697 box B
Before you submit
- 1Verify the revision date reads Rev. December 2025 on the form
- 2Confirm the correct taxpayer type box is checked
- 3Enter the correct EIN in the Identifying number field
- 4Calculate interest refund and enter amount on Part I line 9a
- 5If refund, fill direct‑deposit fields on Part I lines 9b‑9d
- 6Calculate interest due and enter amount on Part II line 10a
- 7If payment, fill direct‑deposit fields on Part II lines 10b‑10d
- 8Sign the form in the designated signature area
- 9Attach the form to the timely filed income tax return or extension
How to file this form
- 1Complete interest calculations for the contract
- 2Fill out Form 8697 with required data and direct‑deposit information
- 3Attach Form 8697 to the appropriate income tax return
- 4Submit the return and Form 8697 to the IRS
- 5Obtain IRS acknowledgment as proof of filing
Known limitations
- 1Form 8697 does not apply to construction contracts expected to be completed in more than 2 years. (Instructions p.1)
- 2Form 8697 does not apply when the taxpayer’s average annual gross receipts for the three prior tax years exceed $31 million (adjusted for inflation) for contracts entered in tax years beginning in 2025. (Instructions p.1)
- 3For closely held pass‑through entities, look‑back interest is applied at the owner level, not at the entity level. (Instructions p.2)
- 4Taxpayers must not reduce taxable income on line 1 by any net operating loss, capital loss, or net section 1256 contracts loss carryback, except as required to compute interest under section 460. (Instructions p.4)
Field map
Compact field-by-field guide
General Info
2 items
Full legal name and taxpayer identification number (SSN or EIN).
Current mailing address.
Details
2 items
Complete all applicable sections of this form according to the official IRS instructions.
Enter the relevant dollar amount if this form involves tax calculation.
Certification
1 items
Read and acknowledge any certifications required by this form.
Signatures
1 items
Sign and date. Unsigned forms cannot be processed.
Almost done reviewing the fields?
Fillable formOpen in Editor->Form 8697 is Rev. December 2025; the instructions direct users to the latest information at IRS.gov/Form8697. The revision added direct‑deposit fields on Part I lines 9b‑9d and Part II lines 10b‑10d.
What changed or needs a fresh check
- Edition date — confirm the form shows Rev. December 2025
- Fee — Not stated in the official source
- Mailing address — Not stated in the official source
- Signature — Not stated in the official source
Quick Facts
Downloads
After you file
- 1File Form 8697 by the due date of the income tax return, including extensions. (Instructions p.3)
- 2Keep a copy of Form 8697 and any attached schedules for your records. (Instructions p.3)
- 3If interest is to be refunded, do not attach Form 8697 to the income tax return; file it separately at the address for individuals or all others. (Instructions p.2, Instructions p.3)
- 4If a corrected Form 8697 is needed, file it only when the amount on Part I line 6 or Part II line 7 changes due to error, examination, or an amended return. (Instructions p.3)
- 5If both the original and corrected Form 8697 show interest owed, file an amended income tax return; if both show interest to be refunded, write “Amended” on the corrected form and file it separately. (Instructions p.3)
Sources
- SRCInstructions p.1 — Form 8697 does not apply to contracts expected to be completed in more than 2 years.
- SRCInstructions p.1 — Form 8697 does not apply when average annual gross receipts for the three prior tax years exceed $31 million.
- SRCInstructions p.2 — Look‑back interest for closely held pass‑through entities is applied at the owner level, not the entity level.
- SRCInstructions p.4 — Taxpayers must not reduce taxable income on line 1 by NOL, capital loss, or section 1256 loss carrybacks, except as required for interest computation.
- SRCInstructions p.3 — File Form 8697 by the due date of the income tax return, including extensions.
- SRCInstructions p.3 — Keep a copy of Form 8697 and any attached schedules for your records.
- SRCInstructions p.2 — Interest refunds are filed separately; do not attach Form 8697 to the income tax return.
- SRCInstructions p.3 — Corrected Form 8697 is required only if Part I line 6 or Part II line 7 changes.
- SRCInstructions p.3 — If both original and corrected Forms 8697 show interest owed, file an amended income tax return; if both show interest to be refunded, write “Amended” on the corrected form and file separately.
- SRCInstructions p.2 — C corporations include look‑back interest on Form 1120 Schedule J, line 9c.
Common confusion points
Do I attach Form 8697 to my tax return?
I think all supporting forms go with the return.
→ Attach only if interest is owed; if interest is to be refunded, file Form 8697 separately at the listed address. (Instructions p.2, Instructions p.3)
Do both spouses need to sign Form 8697 on a joint return?
Joint returns require signatures from both filers.
→ Ensure both spouses sign the signature section when filing jointly. (Instructions p.3)
Which mailing address should I use for Form 8697?
There are different addresses for individuals and other filers.
→ Use the Philadelphia, PA address for individuals; use the Cincinnati, OH address for all others. (Instructions p.2, Instructions p.3)
Where does a C corporation report look‑back interest?
I see Form 8697 but also Form 1120 Schedule J.
→ Report the interest on Form 1120, Schedule J, line 9c, not on Form 8697. (Instructions p.2)
Can I offset taxable income with a net operating loss carryback when calculating interest?
The instructions mention NOLs.
→ Do not reduce taxable income on line 1 by NOL, capital, or section 1256 loss carrybacks, except as required for interest computation. (Instructions p.4)
Is Form 8697 required for contracts where my receipts exceed $31 million?
The $31 million threshold is mentioned.
→ No, the form does not apply if average annual gross receipts for the prior three years exceed $31 million. (Instructions p.1)
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- Form 8697 – file a corrected Form 8697 following the instructions for Part I line 6 or Part II line 7. (Instructions p.3)
Questions about IRS Form 8697
What is IRS Form 8697 used for?
Form 8697 calculates the interest you owe or that you get back when a long‑term contract is finished and the look‑back method applies. It gathers contract and tax information, then determines the correct interest amount.
Who must file IRS Form 8697?
Individuals, joint filers, owners of an interest in a pass‑through entity, and other filers that use an EIN must file IRS Form 8697.
What information does IRS Form 8697 require?
The form collects the filing year, name, address, SSN or EIN, and interest calculations on Part I (lines 1‑11) or Part II (lines 10‑11), including direct‑deposit details for refunds.
When is IRS Form 8697 due?
File Form 8697 by the date you are required to file your income tax return (including extensions).
Where do I file IRS Form 8697?
Send Form 8697 to the Department of Treasury, Internal Revenue Service, Cincinnati, OH 45999-0001.
How do I complete IRS Form 8697?
Enter the filing year at the top, then provide your name, address, and SSN or EIN. Complete the appropriate Part I or Part II, calculating interest on the indicated lines. If a refund is due, supply direct‑deposit information on lines 9b‑9d or 10b‑10d. Sign the form at the bottom only when a refund is claimed; otherwise a signature is not required if filed with your return.
Do I attach Form 8697 to my tax return?
I think all supporting forms go with the return. Attach only if interest is owed; if interest is to be refunded, file Form 8697 separately at the listed address. (Instructions p.2, Instructions p.3)
Do both spouses need to sign Form 8697 on a joint return?
Joint returns require signatures from both filers. Ensure both spouses sign the signature section when filing jointly. (Instructions p.3)
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