Form 2553 Meaning | Where Do I Send Form 2553?

What is Form 2553?

Formula 2553 serves as an elective form for a corporation (or a limited liability corporation (LLC) within the United States to elect to be considered an S corporation for taxation purposes with the federal government. This allows the company to distribute corporate earnings, losses, deductions, and credits to shareholders for federal tax purposes.

This can be beneficial since it eliminates double taxation, in which income is taxed on both the corporate level and later on the personal level when the dividends are distributed.

Key Points About Form 2553:

Eligibility:

There are a few exceptions to whether LLCs or corporations are eligible to be considered an S corporation.

To qualify, a business must meet the following requirements:

Make yourself a domestic business.
Certain trusts, individuals, and estates are the sole permitted shareholders (not corporations, partnerships, or shareholders who are non-resident aliens).
You can have no more than 100 stockholders.
We have just one stock class.
It is not an eligible company (e.g., certain insurance companies, financial institutions, as well as domestic multinational sales companies).

Timing:

In order to be effective for a particular tax year, Form 2553 should typically be submitted:

Not more than two months and 15 calendar days from the start of tax season, the tax year in which the election will be effective, either
Any moment during the tax year prior to the tax year that begins will be effective.

Content:

Form 2553 is required to provide specific information about the business, which includes:

The address and name of the company.
Employer Identification Number (EIN).
The date of incorporation, as well as the state in which the corporation was established.
Addresses and names of shareholders in all shares.
Shareholders agree to the S corporate vote.

Impact:

Once the decision is made, the S corporation is generally not required to pay income tax. Instead, profits and losses, deductions, and credits are distributed to shareholders and included on their tax returns.

Making Form 2553 available is an important choice for small-scale businesses because it determines how a company is subject to federal taxation. In the event of this decision, consulting with a tax professional in order to be aware of the implications is generally recommended.

Where Do I Send Form 2553?

Form 2553 is to be sent to the Internal Revenue Service (IRS) in accordance with the address of the principal office of your business. The exact IRS address is different based on the location of your company. The correct address on the Instructions for Form 2553 is available on the IRS website. It is usually sent to the proper IRS Service Center for your area.

How to File Form 2553?

To file Form 2553:

Fill out the form by providing details about your business or LLC, including information about shareholders and consent.
Once you’ve completed it, mail the completed form to the appropriate IRS Service Center based on your company’s location.
Make sure it is filed by the deadline, but not longer than two months and 15 days following the start of the tax year for which you wish to have the S corporate status in effect. If you prefer, you can send the form by fax directly to the IRS.

Also See: Form 1120-S | Form 941