Jump Links
The IRS Form 2553 is an essential document for small business owners seeking to elect S Corporation status for their entities. This form allows eligible corporations and limited liability companies (LLCs) to be taxed under Subchapter S of the Internal Revenue Code, which can offer significant tax advantages. By filing this form, businesses can avoid double taxation on their income, allowing profits to pass directly to shareholders or members. Completing Form 2553 requires careful attention to detail, as it includes information such as the corporation's name, address, and the date of incorporation, along with the consent of all shareholders. Timeliness is crucial; the form must be submitted within a specific timeframe to ensure the desired tax treatment is granted for the current tax year. Understanding the implications of this election is vital, as it affects how income is reported and taxed at both the corporate and individual levels. Properly navigating the filing process can lead to substantial financial benefits for eligible entities, making it a key consideration for many entrepreneurs.
Key takeaways
Filling out the IRS Form 2553 is an important step for small business owners who want to elect S Corporation status. Here are some key takeaways to keep in mind:
- Timeliness is Crucial: You must file Form 2553 within 75 days of the beginning of the tax year you want the S Corporation status to take effect. Late filings can result in losing the election for that year.
- Eligibility Requirements: Not all businesses can elect S Corporation status. Ensure your business meets the eligibility criteria, including having no more than 100 shareholders and only one class of stock.
- Shareholder Consent: All shareholders must consent to the S Corporation election. This means obtaining signatures from all shareholders on the form, which is essential for a valid submission.
- Understand Tax Implications: Electing S Corporation status can affect how your business income is taxed. Familiarize yourself with the benefits and potential drawbacks, such as self-employment tax implications.
Dos and Don'ts
When filling out the IRS 2553 form, it is important to follow certain guidelines to ensure accuracy and compliance. Here are four things to do and not to do:
- Do double-check all information for accuracy before submission.
- Do ensure that all required signatures are present on the form.
- Don't forget to file the form within the specified time frame to avoid penalties.
- Don't leave any sections of the form blank; provide all necessary details.
Documents used along the form
The IRS Form 2553 is essential for businesses electing to be taxed as an S corporation. However, several other forms and documents often accompany this form to ensure compliance with IRS regulations and to facilitate the election process. Below is a list of these important documents.
- IRS Form 1120S: This is the annual tax return form for S corporations. After the election is made with Form 2553, the business must file Form 1120S each year to report income, deductions, and credits.
- Last Will and Testament Template: For end-of-life planning, consider our comprehensive Last Will and Testament guidelines to ensure your wishes are legally documented.
- Schedule K-1 (Form 1120S): Each shareholder receives this form, which reports their share of the corporation's income, deductions, and credits. It is crucial for individual tax returns.
- IRS Form 941: This form is used to report payroll taxes withheld from employees’ wages. S corporations must file this quarterly if they have employees.
- IRS Form 940: This is the Employer's Annual Federal Unemployment (FUTA) Tax Return. S corporations with employees must file this annually to report unemployment taxes.
- Operating Agreement: While not a tax form, this document outlines the management structure and operational procedures of the S corporation. It is vital for internal governance.
- State Election Forms: Many states require separate forms to recognize the S corporation election. These forms vary by state and ensure compliance with local laws.
Understanding these accompanying documents is critical for any business electing S corporation status. Properly managing these forms can help ensure compliance with tax obligations and streamline the overall process of maintaining S corporation status.
More PDF Documents
Bill of Landing - This form not only protects the interests of shippers but also those of carriers.
In addition to providing essential details like employment and rental history, prospective tenants may benefit from utilizing a convenient resource such as Fast PDF Templates to streamline the application process and ensure that all necessary information is accurately captured, thereby increasing their chances of approval.
Florida Financial Affidavit Short Form - Little room for error exists in the completion of the Florida Financial Affidavit Short.
Things to Know About This Form
What is IRS Form 2553?
IRS Form 2553 is a document that allows a corporation to elect to be taxed as an S corporation. This election can provide significant tax benefits, as S corporations typically avoid double taxation on corporate income. Instead, the income is passed through to shareholders, who report it on their personal tax returns.
Who is eligible to file Form 2553?
To be eligible to file Form 2553, a corporation must meet several criteria:
- Be a domestic corporation.
- Have only allowable shareholders, which include individuals, certain trusts, and estates.
- Have no more than 100 shareholders.
- Have only one class of stock.
- Not be an ineligible corporation, such as certain financial institutions and insurance companies.
When should Form 2553 be filed?
Form 2553 must be filed within a specific timeframe to ensure the S corporation status is granted for the desired tax year. Generally, it should be filed:
- Within 75 days of the beginning of the tax year the election is to take effect.
- Or at any time during the preceding tax year.
Filing late may result in the election being denied for that tax year, so timely submission is crucial.
What information is required on Form 2553?
When completing Form 2553, you will need to provide several key pieces of information, including:
- The corporation's name, address, and Employer Identification Number (EIN).
- The date of incorporation.
- The tax year the S corporation election is to take effect.
- The names and addresses of all shareholders, along with their consent to the election.
Accurate and complete information is essential for the IRS to process your election smoothly.
What happens after Form 2553 is filed?
Once Form 2553 is filed, the IRS will review the application. If approved, the corporation will be granted S corporation status. The IRS typically sends a confirmation letter, which is important to keep for your records. If there are any issues or if the form is incomplete, the IRS may contact you for clarification or additional information.
Can Form 2553 be revoked?
Yes, a corporation can revoke its S corporation status. This can be done by filing a statement with the IRS. The revocation must be made by the shareholders who hold a majority of the shares and must be submitted in a timely manner. Keep in mind that once revoked, the corporation may have to wait five years before it can re-elect S corporation status.
What are the benefits of electing S corporation status?
Electing S corporation status offers several advantages, including:
- Avoidance of double taxation on corporate income.
- Potential self-employment tax savings for shareholders who also work for the corporation.
- Pass-through taxation, allowing profits and losses to be reported on individual tax returns.
- Credibility with customers and suppliers, as S corporations may be viewed as more established entities.
These benefits can enhance the financial well-being of both the corporation and its shareholders.
Preview - IRS 2553 Form
Note: Form 2553 begins on the next page.
Where To File Form 2553 after 6/17/19
If the corporation’s principal business, office, |
Use the following address |
or agency is located in |
or fax number |
|
|
Connecticut, Delaware, District of Columbia, |
Department of the Treasury |
Georgia, Illinois, Indiana, Kentucky, Maine, |
Internal Revenue Service |
Maryland, Massachusetts, Michigan, New |
Kansas City, MO 64999 |
Hampshire, New Jersey, New York, North Carolina, |
|
Ohio, Pennsylvania, Rhode Island, South Carolina, |
|
Tennessee, Vermont, Virginia, West Virginia, |
Fax # |
Wisconsin |
|
|
|
Alabama, Alaska, Arizona, Arkansas, California, |
Department of the Treasury |
Colorado, Florida, Hawaii, Idaho, Iowa, Kansas, |
Internal Revenue Service |
Louisiana, Minnesota, Mississippi, Missouri, |
Ogden, UT 84201 |
Montana, Nebraska, Nevada, New Mexico, North |
|
Dakota, Oklahoma, Oregon, South Dakota, Texas, |
|
Utah, Washington, Wyoming |
Fax # |
|
|
Form 2553
(Rev. December 2017)
Department of the Treasury Internal Revenue Service
Election by a Small Business Corporation
(Under section 1362 of the Internal Revenue Code)
(Including a late election filed pursuant to Rev. Proc.
▶You can fax this form to the IRS. See separate instructions.
▶Go to www.irs.gov/Form2553 for instructions and the latest information.
OMB No.
Note: This election to be an S corporation can be accepted only if all the tests are met under Who May Elect in the instructions, all shareholders have signed the consent statement, an officer has signed below, and the exact name and address of the corporation (entity) and other required form information have been provided.
Part I |
|
Election Information |
|
|
|
|
|
|
|
Name (see instructions) |
A Employer identification number |
||
Type |
|
|
|
|
|
|
|
Number, street, and room or suite no. If a P.O. box, see instructions. |
B Date incorporated |
|
|||
or |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
City or town, state or province, country, and ZIP or foreign postal code |
C State of incorporation |
|
|||
|
|
|
|
|||
|
|
|
|
|
|
|
D |
Check |
the applicable box(es) if the corporation (entity), after applying for the EIN shown in A above, changed its |
name or |
address |
||
EElection is to be effective for tax year beginning (month, day, year) (see instructions) . . . . . . ▶
Caution: A corporation (entity) making the election for its first tax year in existence will usually enter the beginning date of a short tax year that begins on a date other than January 1.
FSelected tax year:
(1)
Calendar year
(2)
Fiscal year ending (month and day) ▶
(3)
(4)
If box (2) or (4) is checked, complete Part II.
GIf more than 100 shareholders are listed for item J (see page 2), check this box if treating members of a family as one shareholder results in no more than 100 shareholders (see test 2 under Who May Elect in the instructions) ▶ 
HName and title of officer or legal representative whom the IRS may call for more information
Telephone number of officer or legal representative
IIf this S corporation election is being filed late, I declare I had reasonable cause for not filing Form 2553 timely. If this late election is being made by an entity eligible to elect to be treated as a corporation, I declare I also had reasonable cause for not filing an entity classification election timely and the representations listed in Part IV are true. See below for my explanation of the reasons the election or elections were not made on time and a description of my diligent actions to correct the mistake upon its discovery. See instructions.
|
Under penalties of perjury, I declare that I have examined this election, including accompanying documents, and, to the best of my |
||
Sign knowledge and belief, the election contains all the relevant facts relating to the election, and such facts are true, correct, and complete. |
|||
Here |
▲Signature of officer |
|
|
|
Title |
Date |
|
For Paperwork Reduction Act Notice, see separate instructions. |
Cat. No. 18629R |
Form 2553 (Rev. |
|
Form 2553 (Rev. |
Page 2 |
Name |
Employer identification number |
Part I Election Information (continued) Note: If you need more rows, use additional copies of page 2.
J
Name and address of each
shareholder or former shareholder required to consent to the election.
(see instructions)
K
Shareholder’s Consent Statement
Under penalties of perjury, I declare that I consent to the election of the
Signature |
Date |
L
Stock owned or
percentage of ownership
(see instructions)
Number of |
|
shares or |
|
percentage |
Date(s) |
of ownership |
acquired |
M |
|
Social security |
|
number or |
N |
employer |
Shareholder’s |
identification |
tax year ends |
number (see |
(month and |
instructions) |
day) |
Form 2553 (Rev.
Form 2553 (Rev. |
Page 3 |
|
Name |
|
Employer identification number |
|
|
|
Part II |
Selection of Fiscal Tax Year (see instructions) |
|
Note: All corporations using this part must complete item O and item P, Q, or R. |
|
|
O Check the applicable box to indicate whether the corporation is: |
|
|
1. |
A new corporation adopting the tax year entered in item F, Part I. |
|
2. |
An existing corporation retaining the tax year entered in item F, Part I. |
|
3. |
An existing corporation changing to the tax year entered in item F, Part I. |
|
PComplete item P if the corporation is using the automatic approval provisions of Rev. Proc.
1. Natural Business Year ▶ |
I represent that the corporation is adopting, retaining, or changing to a tax year that qualifies |
as its natural business year (as defined in section 5.07 of Rev. Proc.
2. Ownership Tax Year ▶ |
I represent that shareholders (as described in section 5.08 of Rev. Proc. |
than half of the shares of the stock (as of the first day of the tax year to which the request relates) of the corporation have the same tax year or are concurrently changing to the tax year that the corporation adopts, retains, or changes to per item F, Part I, and that such tax year satisfies the requirement of section 4.01(3) of Rev. Proc.
Note: If you do not use item P and the corporation wants a fiscal tax year, complete either item Q or R below. Item Q is used to request a fiscal tax year based on a business purpose and to make a
QBusiness
1. Check here ▶ 
if the fiscal year entered in item F, Part I, is requested under the prior approval provisions of Rev. Proc.
Yes |
No |
2.Check here ▶ 
to show that the corporation intends to make a
3.Check here ▶ 
to show that the corporation agrees to adopt or change to a tax year ending December 31 if necessary for the IRS to accept this election for S corporation status in the event (1) the corporation’s business purpose request is not approved and the corporation makes a
RSection 444
1.Check here ▶ 
to show that the corporation will make, if qualified, a section 444 election to have the fiscal tax year shown in item F, Part I. To make the election, you must complete Form 8716, Election To Have a Tax Year Other Than a Required Tax Year, and either attach it to Form 2553 or file it separately.
2.Check here ▶ 
to show that the corporation agrees to adopt or change to a tax year ending December 31 if necessary for the IRS to accept this election for S corporation status in the event the corporation is ultimately not qualified to make a section 444 election.
Form 2553 (Rev.
Form 2553 (Rev. |
Page 4 |
Name |
Employer identification number |
Part III Qualified Subchapter S Trust (QSST) Election Under Section 1361(d)(2)* Note: If you are making more than
one QSST election, use additional copies of page 4.
Income beneficiary’s name and address
Social security number
Trust’s name and address
Employer identification number
Date on which stock of the corporation was transferred to the trust (month, day, year) . . . . . . . . ▶
In order for the trust named above to be a QSST and thus a qualifying shareholder of the S corporation for which this Form 2553 is filed, I hereby make the election under section 1361(d)(2). Under penalties of perjury, I certify that the trust meets the definitional requirements of section 1361(d)(3) and that all other information provided in Part III is true, correct, and complete.
Signature of income beneficiary or signature and title of legal representative or other qualified person making the election |
|
Date |
*Use Part III to make the QSST election only if stock of the corporation has been transferred to the trust on or before the date on which the corporation makes its election to be an S corporation. The QSST election must be made and filed separately if stock of the corporation is transferred to the trust after the date on which the corporation makes the S election.
Part IV Late Corporate Classification Election Representations (see instructions)
If a late entity classification election was intended to be effective on the same date that the S corporation election was intended to be effective, relief for a late S corporation election must also include the following representations.
1The requesting entity is an eligible entity as defined in Regulations section
2The requesting entity intended to be classified as a corporation as of the effective date of the S corporation status;
3The requesting entity fails to qualify as a corporation solely because Form 8832, Entity Classification Election, was not timely filed under Regulations section
4The requesting entity fails to qualify as an S corporation on the effective date of the S corporation status solely because the S corporation election was not timely filed pursuant to section 1362(b); and
5a The requesting entity timely filed all required federal tax returns and information returns consistent with its requested classification as an S corporation for all of the years the entity intended to be an S corporation and no inconsistent tax or information returns have been filed by or with respect to the entity during any of the tax years, or
bThe requesting entity has not filed a federal tax or information return for the first year in which the election was intended to be effective because the due date has not passed for that year’s federal tax or information return.
Form 2553 (Rev.
Document Specifics
| Fact Name | Details |
|---|---|
| Purpose | The IRS Form 2553 is used by small businesses to elect S corporation status for tax purposes. |
| Eligibility | Only domestic corporations can file Form 2553. Certain requirements must be met, including having no more than 100 shareholders. |
| Filing Deadline | The form must be filed within 75 days of the beginning of the tax year for which the election is to take effect. |
| State Requirements | Some states have their own forms and requirements for S corporation status. Check with your state’s tax authority for specific rules. |
| Shareholder Consent | All shareholders must consent to the S corporation election. This is typically done by signing the form. |
| Revocation | An S corporation can revoke its election by filing a statement with the IRS. This may have tax implications. |
| Form Availability | The form can be downloaded from the IRS website, and it is also available through tax preparation software. |
| Governing Laws | Federal tax law governs the S corporation election under Internal Revenue Code Section 1362. |
How to Fill Out IRS 2553
Filling out the IRS Form 2553 is an important step for certain businesses that wish to elect to be treated as an S corporation for tax purposes. Completing this form correctly can help ensure that your business benefits from the tax advantages associated with this status. Here’s how to fill it out step-by-step.
- Obtain the Form: Download Form 2553 from the IRS website or request a paper copy from the IRS.
- Fill in Basic Information: Enter the name of your corporation, the address, and the Employer Identification Number (EIN).
- Select the Tax Year: Indicate the tax year your corporation will follow. Most businesses choose a calendar year.
- Choose Your Election Date: Specify the date you want your S corporation election to take effect. This can be the current year or a future date.
- List Shareholders: Provide the names, addresses, and percentage of stock owned for each shareholder. Ensure all shareholders sign the form.
- Sign and Date: The form must be signed by an authorized officer of the corporation, and the date must be included.
- Submit the Form: Send the completed form to the appropriate IRS address based on your business location. Check the IRS website for the correct mailing address.
After submitting the form, keep a copy for your records. The IRS will notify you if your election is accepted or if there are any issues. It's essential to stay informed about any further requirements or deadlines related to your S corporation status.