First of all, it’s crucial to remember that Form 2553 must be submitted no later than two months and fifteen days following the start of the tax year in which the election is to be effective. For instance, you must submit Form 2553 by March 15, 2022, if you want the election to be effective for the 2022 tax year. You will have to wait until the subsequent tax year to make the choice if you miss this deadline.
If you submit Form 2553 together with your tax return by this deadline, you are in compliance. However, it’s crucial to make sure you fully complete the form and include all the necessary data. If you don’t do this, the IRS can reject your election or delay approving it.
Let’s move on to some relevant questions at this point. One query that is frequently asked is whether Forms 8832 and 2553 must both be submitted. No, that’s not the solution to this query. The Entity Classification Election, commonly known as Form 8832, is used to choose how a company entity will be categorised for tax reasons. You only need to submit Form 2553 if you are already categorized as a corporation or partnership and want to elect S corporation status.
People also inquire as to whether they must submit Form 2553 on an annual basis. As long as the election is still in force, the answer to this question is no. However, it’s crucial to keep in mind that certain situations, such having more than 100 shareholders or a nonresident alien shareholder, could result in the election being terminated.
Let’s now discuss how a single member LLC can choose to become a S company. The procedure for multi-member corporations or LLCs differs slightly from this one. In essence, the single member LLC must submit Form 8832 in order to elect to be treated as a corporation for tax reasons. Following completion of this step, the LLC can submit Form 2553 to elect S corporation status.
In conclusion, if you fulfill the deadline and accurately complete the form, you can file Form 2553 with your tax return. As long as the election is still in effect, you don’t need to file Form 8832 and Form 2553 together, and you only need to file Form 2553 once. Forms 8832 and 2553 must be filed if you have a single member LLC and want to choose S corporation status. Although processing times for Form 2553 can vary, the IRS normally approves the election in about 60 days.
The 15th day of the third month of the tax year is normally the date for submitting Form 2553 along with the tax return. To make sure you are meeting all applicable deadlines, check the IRS website or speak with a tax expert as there are some exceptions to this deadline.
The trustee of the trust must submit Form 2553 to the IRS in order to elect ESBT (Electing Small Business Trust) status. This form must be submitted by the trust’s tax return due date, including any extensions. The form shall be signed by the trustee and by each S corporation shareholder and shall set forth the name, address, and tax identification number of the trust. Unless it is cancelled or revoked, the election is valid for the current tax year and all succeeding tax years.