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Form 2553 is a tax form that a corporation can file to elect taxation as an S corporation. Form 2553 provides the IRS with information to continue the process of transforming a corporation to an S corporation. The form also provides documentation of the effective date of the S corporation election, removing the need to file other tax classification forms (such as Form 8832.)Before filling out Form 2553, a corporation needs to gather the following tools and pieces of information:A fax machine or digital scanner with fax capability (Form 2553 must be faxed to one of two Internal Revenue Service offices, based on the corporations home state)The corporations name and addressThe corporations Employer Identification NumberThe corporations incorporation date and state of incorporationThe effective date the corporation desires for its new S corporation statusContact information for an officer or legal representative who will serve as a contact point with the IRSIf Form 2553 is being filed late, an explanation of the circumstances that caused it to be filed lateAcceptable justification examples for late filing can be found in the official IRS instructions for Form 2553Signatures from all shareholdersCorporations should complete and file Form 2553 no more than two months and 15 days after the beginning of the tax year the election is to take effect. Corporations can also decide to make the S corp election at any time during the tax year preceding the tax year it is to take effect. Form 2553 is made up of four parts, each of which deals with specific types of information. Lets explore the form together.Part IAs with most forms, the first section is where you enter basic information about the company, such as its name, address and Employer Identification Number (EIN). You will also have to provide the IRS with the Effective Date of Election, a list of all shareholders and shares they own, and signatures from a corporate officer and all shareholders.Part IIPart II is for those who checked box 2 or 4 in Part I, Item F, indicating a fiscal tax year or a 52- to 53-week tax year not ending in December. If youre required to complete this section, then you should consult with a tax professional, as it is quite complicated.Part IIIPart III of Form 2553 is specifically for qualified subchapter S trusts (QSST). For those who are required to complete Part III, keep in mind that you must make the election in Part I, as Part III of Form 2553 cannot be submitted on its own.Part IVPart IV of Form 2253 is for businesses where the corporate classification election intended to be effective on the same date that a late S-corporation election was intended to be effective.Submitting Your Form 2553Once Form 2553 is completed, you must submit it to one of two locations, depending on where you are filing.Those filing in Connecticut, Delaware, District of Columbia, Georgia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia or Wisconsin will send the form to the IRS at the Department of Treasury office in Kansas City, Missouri.Those filing in Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington or Wyoming will send their forms to the IRS at the Department of Treasury in Ogden, Utah. Login Menu Contact Us Email Us Learn more about what Form 2553 is in business. Ready to start your dream business? Check the availability of your new company name to get started. Starts at $49 + state fees and only takes 5-10 minutes Excellent 10,210 reviews Form 2553 is the document that you file with the Internal Revenue Service (IRS) if you want to elect an S corporation tax status. There can be significant tax benefits for small businesses that file Form 2553. Below, we discuss the Form 2553 definition, the advantages of filing Form 2553, and the requirements for becoming an S corporation. When you incorporate a business, by default, the IRS treats the company as a C corporation. However, it can elect to become an S corporation as long as the business meets the IRSs requirements. Corporations must file Form 2553 — Election by a Small Business Corporation — to make this change. Form 2553 Benefits Filing Form 2553 offers advantages in terms of tax treatment for the corporation. Lets look at the difference between how a C corporation and an S corporation are taxed. The IRS treats C corporations as separate, tax-paying entities. The corporation itself pays income taxes on profits at the corporate tax rate. Then, shareholders pay income taxes on any dividends they receive. These shareholder taxes are calculated at the individuals tax rate. This process is known as double taxation because it essentially taxes the same income twice. S corporations, on the other hand, are considered pass-through entities. Any profits, losses, credits, and deductions pass through to the owners, who report everything on their personal tax returns. The S corporation doesnt pay its own income taxes. Instead, the owners pay the taxes as their personal income tax. This tax treatment is called pass-through taxation. Small business owners find this method of taxation advantageous because they often pay less in taxes and have more money left to reinvest back into the company. What are the Form 2553 requirements? Not all corporations can file Form 2553 and make an S corporation election. The IRS has strict requirements and limitations. Eligibility Requirements For a corporation to qualify for S corporation status, it must: Be a domestic corporationHave no more than 100 shareholdersHave only allowable shareholders (e.g., individuals, estates, certain trusts, and qualifying exempt organizations) Have only one class of stockNot be an ineligible corporation For more details about the IRSs requirements, read through the Instructions for Form 2553. Timing Requirements Depending on when you want the election to take effect, you can file Form 2553 at two different points during the year. If you want the election to be effective during the current tax year, you must file Form 2553 within the first two months and 15 days of that year. If you file the form anytime after that, the S corporation status will go into effect during the next tax year. Check out the instructions for Form 2553 for examples of the different filing times. In limited situations, the IRS makes exceptions for late filings. Keep in mind that your state of incorporation may require you to file additional forms, so check the states department that handles business formations. S corporation status isnt a default — but something you must intentionally elect with the IRS. To do this, the company must meet certain requirements and file Form 2553. We Can Help If youre ready to start an S corporation, check out our S Corporation Formation Service. Our experts are standing by to file the paperwork quickly and accurately. We have everything you need to start and run your own business, including our Worry-Free Compliance Service. Let us know how we can help you create your dream business. Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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