Instructions to Fill out Form 2553

This document offers a comprehensive guide on filling out Form 2553, which is used to make an election to be an S corporation. It covers the purpose of the form, eligibility, election timeline, late election relief, filing location, acceptance or nonacceptance, and the end of the election.

In this article, we'll provide information on Form 2553 and a step-by-step guide on how to fill it out, keeping it straight to the point.

What is Form 2553?

Form 2553 is an election form used by corporations and other eligible entities to elect to be treated as an S corporation for tax purposes. The purpose of this form is to make an election under section 1362(a) to be an S corporation, which allows income to be taxed to the shareholders rather than the corporation itself.

To be eligible, an entity must meet specific criteria, such as having no more than 100 shareholders and only one class of stock. The election must be made within a specific timeframe, and late elections may be allowed under certain circumstances. Once the election is made, it remains in effect until terminated or revoked.

Who Must File Form 2553?

Any corporation or other entity eligible to elect to be treated as a corporation needs to file Form 2553 to make an election under section 1362(a) to be an S corporation. This includes entities that meet specific criteria, such as having no more than 100 shareholders and only one class of stock. By filing Form 2553, these eligible entities can elect to have their income taxed to the shareholders rather than the corporation itself.

Form 2553 Tax Filing Deadlines and Due Dates

• Due date for new corporations: Form 2553 must be filed no later than two months and 15 days after the beginning of the tax year the election is to take effect.
• Due date for existing corporations: Form 2553 must be filed by the 15th day of the third month of the tax year preceding the tax year the election is to take effect.
• Due date for corporations wanting to make the election for the current tax year: Form 2553 must be filed by the 15th day of the third month of the current tax year.

Form 2553 Late Payment Penalty

Although the instructions for Form 2553 do not specifically mention a late payment penalty, it is essential to file the form within the required timeframes to avoid potential issues with the IRS. Failure to file on time may result in the IRS denying the S corporation election, which could lead to the entity being taxed as a C corporation and facing additional tax liabilities. Therefore, it is crucial to adhere to the filing deadlines to ensure a smooth election process and avoid any potential penalties or complications.

Step-by-Step Instructions for Form 2553

Here are the step-by-step instructions for filling out Form 2553:

1. Name and address: Enter the name and address of the corporation or entity electing to be an S corporation.
2. Employer Identification Number (EIN): Enter the EIN of the corporation or entity.
3. Effective date of election: Enter the date the S corporation election is to take effect. This can be either the beginning of the current tax year or the beginning of the next tax year.
4. Selected tax year: Indicate the corporation's selected tax year by checking the appropriate box. Options include a calendar year, a fiscal year, or a 52-53-week tax year.
5. Shareholder's consent statement: Each shareholder must provide their name, address, Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN), number of shares owned, and the date the shares were acquired. Each shareholder must also sign and date the form to indicate their consent to the S corporation election.
6. Additional information for qualified subchapter S trusts (QSSTs): If any shareholder is a QSST, provide the name, address, and SSN or ITIN of the income beneficiary, as well as the name and EIN of the trust. The trustee must sign and date the form to indicate their consent to the S corporation election.

How to Submit Form 2553

To submit Form 2553, complete all necessary information in Part I, obtain consents from all shareholders or former shareholders, sign and date the form, and file it with the appropriate IRS center or send it by fax or mail. Ensure that the form includes accurate information such as the corporation's name, address, EIN, effective date of the election, selected tax year, and shareholder details, as well as any additional information required for specific sections.

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