Electing S-Corp Status Retroactively is Possible
It is possible to go back as far as 3 years and 75 days from the date the change is requested to enable you to capture the benefits for 2020 and going forward.
Requirements for S Corporation
To start your S Corporation, fill out the articles of incorporation form with all your company’s information and file Form 2553 through the IRS. To be eligible, your company must have no more than 100 shareholders and one class of stock.
Filing S Corporation Taxes
S corporations lower your taxes by reducing self-employment tax. Additionally, the IRS requires detailed documentation of all transactions and distributions. Filing taxes for an S Corporation is a multi-step process that requires accuracy and adherence to IRS regulations.
Should I File My Own S Corporation Taxes?
S corporations don’t pay federal corporate income taxes. Instead, the company’s individual shareholders split up the income (or losses) amongst each other and report it on their own personal tax returns. This lets S corporations avoid double taxation. An S corp files business tax returns on Form 1120-S. In addition, shareholders’ losses and profits are reported on Schedule K-1, which is attached to Schedule E of the individual tax return. The owners have to pay income taxes on their share of the ownership of the company, which is reported on Form 1040.
Use of TurboTax for S Corporation Taxes
You have to use TurboTax Business to file an 1120-S tax return for the S-Corp. Using that program, the S-Corp will issue you a K-1 for your personal tax return.