IRS Form 2553 "Election by a Small Business Corporation" is required to be filled out by corporations who elect to be taxed as an S-corporation. This allows your business to save money by qualifying for pass-through taxation where income and losses are passed through to you and any shareholders and reported through your personal tax return.
Eligibility for S-Corporation Status:
- Your company must be a domestic corporation or entity.
- Your company should have no more than 100 shareholders.
- You should not have any nonresident alien shareholders.
- Your company should only have one class of stock.
- Your company is not an ineligible corporation, as stipulated by the IRS.
Form 2553 Instructions:
1. Election Information.
Under Election Information, fill in the corporation's name and address, along with your EIN number and date and state of incorporation.
2. Item E.
Under Item E, provide an effective date for an election, which is based on the date your corporation first had shareholders, assets, or began doing business. If you are making an election for your first tax year in existence, you will usually enter the beginning date of a tax year that begins on a date other than January 1.
3. Item F.
Under Item F, check the box that corresponds with the S corporation's selected tax year. If box 2 or 4 is checked, provide the additional information about the tax year, and complete Part II of the form.
4. Sign the form.
Sign and date the form digitally or by hand.
5. Column J.
In Column J, enter the names and addresses of all the shareholders or former shareholders required to consent to the election. If you are a single-member LLC that owns stock in the corporation, and you are eligible to be an S-corporation shareholder, fill in your own name and address.
6. Column K.
In Column K, each shareholder must sign and date the form.
7. Column L.
Enter the number of shares of stock each shareholder owns on the date(s) the election is filed and the date the stock was acquired. An LLC should enter the percentage of ownership and date(s) acquired.
8. Column M.
Enter the Social Security Number of each person listed in Column J.
9. Column N.
Enter the month and day that each shareholder's tax year ends.
For more detailed information on filing Form 2553, check out the IRS instructions.
Where to file Form 2553:
If the corporation’s principal business, office, or agency is located in:
Use the following address or fax number:
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, Wisconsin
Department of the Treasury, Internal Revenue Service, Kansas City, MO 64999 Fax no: (855) 887-7734
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, Wyoming
Department of the Treasury, Internal Revenue Service, Ogden, UT 84201 Fax no: (855) 214-7520
What is the purpose of Form 2553?
The purpose of Form 2553 is to allow corporations to apply for S-corporation status and qualify for pass-through taxation. This means that all income and losses that the business makes are passed through to the owner and shareholders, and reported to the IRS via their personal income tax returns. This prevents businesses from being taxed twice.
Can Form 2553 be filed electronically?
No. Form 2553 can only be mailed or faxed to the IRS.
Do I need to file Form 2553?
You only need to file Form 2553 if you are applying for S-corporation tax status as a small business.
Do I need to file Form 8832 and 2553?
If you want to change your business from a sole proprietorship to a corporation, you need to file Form 8832. You only have to file Form 2553 if you want your LLC to be treated as an S-corp for income tax purposes.
Is there a fee to file Form 2553?
If you check the box under Item Q1 on the form, you will be charged a user fee of $5,800. You will only pay after you have been notified by the IRS.
Do I have to file Form 2553 every year?
No. Form 2553 must be filed no later than two months and 15 days after the beginning of the tax year in which the election takes effect.
Where can I find instructions for Form 2553?
For detailed information on filing Form 2553, check out the IRS instructions.