LLCs (Limited Liability Companies) use IRS Form 2553 to choose their tax treatment. An LLC is taxed as a pass-through entity by default. This indicates that the LLC’s earnings are transferred to the owners’ individual tax returns. But by submitting Form 2553, an LLC might choose to be taxed as a S Corporation. An LLC might possibly save hundreds of dollars a year in taxes by making this choice. This article will walk you through the process of completing Form 2553 for your LLC.
Step 1: Verify Your Eligibility
Make sure your LLC qualifies for S Corporation classification before you begin filling out Form 2553. The LLC must have fewer than 100 stockholders, all of whom must be citizens or residents of the United States. In addition, there can be no corporate stockholders and only one class of stock among the LLC’s owners. If you satisfy these conditions, you may submit Form 2553.
Step 2: Complete the Required Information You must fill out the name, address, and Employer Identification Number (EIN) for your LLC in the first section of the Form 2553. Additionally, you must include the state and day on which your LLC was established.
Step 3: Determine Your Tax Classification The tax status of your LLC will be determined in the following section of Form 2553. You must choose “S Corporation” and enter the day on which you wish the election to go into effect. This date cannot be later than two months and fifteen days from the start of the tax year for your LLC or from the day your LLC was created. Step 4 is to sign and date the form. The form must be signed and date as the last step. One of your LLC’s officers must sign the document, and they must provide their name, title, and the date they signed it. What should I affix to Form 2553? Form 2553 does not require any attachments. However, if your LLC’s Articles of Organization or Articles of Amendment have only recently been submitted to the state, you should provide a copy of these records with your Form 2553.
Does IRS Form 2553 have to be submitted annually?
No, Form 2553 only needs to be submitted once. To record your LLC’s earnings and outlays, you must submit Form 1120S (S Corporation Tax Return) annually.
Can I submit Form 2553 electronically?
No, you cannot electronically file Form 2553. The form must be printed out and mailed to the IRS.
Can one member of an LLC file Form 2553? No, LLCs with a single member are not permitted to submit Form 2553. Only LLCs with two or more members have the option to use Form 2553 to elect to be taxed as a S Corporation.
In conclusion, Form 2553 is a useful IRS form that LLCs can use to reduce their tax obligations. You can easily complete Form 2553 for your LLC by following the above-described steps. Prior to submitting, confirm your eligibility once more. You must also submit Form 1120S each year to record the income and spending of your LLC.
The Form 2553 for an LLC must be filed for a fee. Form 2553 submissions to the Internal Revenue Service (IRS) will cost $60 as of 2021. The cost could change, though, depending on the LLC’s circumstances and the year. Before submitting the form, it is crucial to confirm the IRS’s current filing fee.