S Corp Election Form: Everything You Need to Know

S corporations that choose to receive tax treatment as pass-through entities must submit a S Corp Election Form, also known as Form 2553, to the Internal Revenue Service (IRS). S firms can prevent double taxation by using this form to move company income, losses, deductions, and credits onto shareholders’ individual tax returns.

S Election Form 2553: What is it?

S corporations can elect to be regarded as a pass-through entity for federal tax purposes by submitting Form 2553, a two-page form. The following criteria must be satisfied by a company to be eligible for S corporation status: Being a domestic corporation and having only permitted stockholders, such as people, specific trusts, and estates

– Only have one class of stock

– No more than 100 shareholders

What form must a newly formed S corporation submit in order to choose a tax year? A newly created S company must submit Form 2553 within 75 days of the date of incorporation, or by the 15th day of the third month of its tax year, whichever is later. All stockholders must sign the form, which also contains the following details: The following information must be provided:

– The corporation’s name, address, and employer identification number (EIN)

– The primary contact’s name and address

– The tax year of the corporation

– The shareholders’ names, addresses, and TFNs

Exactly how can I submit an S-corp election? Form 2553 can be submitted electronically or by mail by S corporations. The corporation must use the IRS’s online e-filing platform to submit documents electronically. The corporation must print the form, sign it, and mail it to the correct IRS address in order to file by mail. Can I choose an S-corp for 2021 still?

Yes, companies can still choose to be treated as S corporations for the 2021 tax year. For the 2021 tax year, Form 2553 must be submitted by March 15, 2021, or, if the corporation was incorporated later in the year, within 75 days of that date.

In conclusion, S Corp Election Form 2553 is an essential document for small firms who seek to benefit from pass-through tax classification and avoid double taxation. A company can choose to be taxed as a S corporation for federal tax purposes by submitting this form, which allows corporate income, losses, deductions, and credits to be passed on to shareholders’ individual tax returns. To profit from S corporation status, it’s critical for firms to comply with all requirements and submit the form within the necessary time frames.