When and How to File Form 2553
Form 2553 elections S corporation status. To avoid corporate income tax, LLCs file Form 2553. No need to first elect C corporation status. Recommended LLCs vs S Corps guide helps choose the best tax status for small business.
Form 2553 due dates: File within 2 months and 15 days of new corporation’s first tax year. If you miss the deadline, include a reasonable cause explanation in Section I.
Where to file Form 2553 addresses: IRS state addresses differ. File using certified mail with return receipt.
The Importance of Filing Form 2553
Why file: Tax savings pass through income, losses, deductions, and credits to shareholders, avoiding double taxation.
Shareholder consent: Sign and date Section K. If late, provide a reasonable cause explanation in Section I.
Additional Information on S Corporation Election
Consult a tax professional to change an entity from C to S corporation filing status. Fax or mail Form 2553 to the appropriate IRS Service Center.
Fax number for Form 2553: (855) 215-1627 (within the U.S.).
Understanding Form 2553
What is Form 2553? Form 2553, Election by a Small Business Corporation, is an Internal Revenue Service form that can be filed by a business to elect to be registered as an S Corporation rather than a C Corporation. By default, corporations are recognized as a C corporation by the IRS for tax purposes.
C Corporation vs. S Corporation: Owners on an S Corporation are required to pay personal taxes on all income and loss, paying personal rates. C corporations pay tax on corporate income and dividend income, which can lead to double taxation since both the entity and the owner pay taxes on profits.
How to Make the S Corp Election
Filing for S Corp: You must first incorporate your business by drafting articles of incorporation and other necessary legal documents with the state’s Secretary of State office, then elect to have the entity taxed as an S Corporation with the IRS. Form 2553 notifies the IRS that you want to elect S corp status.
Form Details: Part I requests identifying information for the business. Parts III and IV must be filled out, and owners must provide consent in column K if shareholders are listed as a qualified subchapter S trust (QSST). If filing the election late, see the requirements that must be met in Part IV.