An IRS form called Form 2553 is used to choose S-corporation status for a corporation. Small business owners frequently choose S-corporations because they enable their companies to forego paying federal income tax. The business’s gains and losses are transferred to the owners’ personal tax returns, where they are subject to their respective personal tax rates. The business owners may save a lot of money on taxes as a result of this.
The good news is that Form 2553 can be submitted electronically. You can submit your S-corporation election electronically through the IRS’s online “Election by a Small Business Corporation” form. As opposed to mailing in a physical copy of the form, this procedure is quicker and more practical.
Form 2553 can be filed for free. However, your organization must fulfill specific standards in order to be eligible for S-corporation status. For instance, it must only have 100 shareholders, all of whom must be residents or citizens of the United States. The firm must also only issue one type of stock.
Form 2553 can be sent along with your tax return, but it’s usually a good idea to do so as soon as your organization is set up. Your S-corporation election will be valid for the duration of the tax year if you do this. The S-corporation election will only take effect for the following tax year if the form is submitted late.
How Do I Submit an S-Corp Election Lately? Under certain conditions, you can still choose to form an S-corporation even though you missed the deadline to submit Form 2553. You must have a convincing justification for why the election was not submitted by the deadline in order to do this. The IRS will take into account details including whether there was a valid reason for the failure to register and if the corporation has consistently operated as an S-corporation.
If you meet the criteria and submit Form 2553 on time, you can still choose to be an S-corporation for 2021. However, bear in mind that you have until March 15 of the tax year in which you want the election to be effective to file the form. A late S-corporation election may still be possible if you miss this deadline, but it will only take effect for the next tax year.
In conclusion, submitting Form 2553 online is a quick and easy solution for your small firm to choose S-corporation status. Although there is no price for filing the form, you must fulfill a number of requirements to be eligible for S-corporation status. Under some conditions, you could still be able to make a late S-corporation election even if you miss the deadline to submit the paperwork. To guarantee that your S-corporation election is valid for the whole tax year, it’s crucial to submit the paperwork on time.
Depending on the volume of Form 2553 being processed by the IRS as well as its quality and completeness, processing times can change. The IRS typically processes Form 2553 in around 60 days. It might take longer in some circumstances, though. To prevent any processing delays, it’s crucial to make sure the form is correctly completed with all pertinent information.