If you’re a small business owner considering the S corp route, IRS Form 2553 is the key to electing S corporation status for your business. But don’t worry — filling out this form doesn’t need to be a headache. We’re here to guide you through the process and help you file Form 2553 without the hassle. Let’s dive into the details of this form, why it matters, and how to make sure you get it right.
At a glance:
Form 2553 allows small businesses to elect S corporation status and avoid double taxation.
Your business must meet specific eligibility requirements to be an S corp.
Form 2553 must be filed on time — typically within 75 days of the start of your tax year.
What is IRS Form 2553?
IRS Form 2553, Election by a Small Business Corporation, is the form you file to elect S corporation status for your business. This form essentially tells the Internal Revenue Service that you want your small business corporation to be taxed as an S corp (we’ll get into what this means below).
What is an S corporation?
An S corp is a special tax status that allows your business to bypass corporate income taxes and instead pass profits, losses, and deductions directly to you as the owner to be reported on your personal tax return. This can result in significant tax savings, especially for small businesses.
As far as business entities go, S corps are not one of the default tax classifications. That’s why Form 2553 exists, so you can tell the IRS you wish to be taxed as an S corp.
Tax advantages of an S corporation
No double taxation: Unlike a C corporation, an S corp doesn’t pay federal taxes on its profits. Instead, income or losses are passed through to you, the owner, and reported on your personal income tax return.
Self-employment tax savings: As an S corp, you may reduce your self-employment taxes by taking part of your income as distributions rather than a salary. These distributions are generally not subject to self-employment tax, unlike regular income from a C corp.
Why choose S corp status?
Choosing S corporation status can help you save on taxes and simplify your business tax filings. It allows you to avoid the double taxation of a C corporation while enjoying the protection of limited liability for your business.
Who needs to file Form 2553?
Corporations: If you’re already a C corporation, you may file Form 2553 to elect S corporation status.
Limited liability companies (LLCs): An LLC can also file Form 2553 to become taxed as an S corp.
Requirements to elect S corp status
Before your small business can elect S corporation status, it must meet a few basic IRS eligibility requirements. To qualify, your business must:
Be a domestic corporation or other business entity.
Have no more than 100 shareholders.
Shareholders must be U.S. citizens, permanent residents, or resident aliens.
Have only one class of stock — no multiple classes with different rights.
Shareholders must be individuals, estates, or certain trusts (no corporations or partnerships).
Not be an ineligible corporation (like an insurance company, certain financial institutions, or a domestic international sales corporation).
Form 2553 example
Here’s what Page 1 of IRS Form 2553 looks like:
Common mistakes to avoid:
Missed deadlines: Ensure you file Form 2553 by the appropriate deadline — within two months and 15 days of the beginning of your tax year. If it’s a late election, make sure to provide a reasonable cause explanation.
Incomplete information: Double-check that you’ve provided all the necessary details, such as your EIN, shareholder consent, and tax year.
IRS Form 2553 instructions: How to file Form 2553
When filing Form 2553, it’s important to get it right. These IRS Form 2553 S corporation election instructions walk you through each section of the form so you can file your S corp election correctly and on time.
Here’s what to do for each part of the form.
Part I: Election information
This is the easiest part. Start by filling out some basic information about your business:
Box A: Enter your business name, employer identification number (EIN), and mailing address. If your personal address is also your business mailing address, you can write [Business Name] C/O [Your Name] as the address.
Box B: The date your business was incorporated or registered.
Box C: The state where you formed your business.
Box D: Check these boxes if you changed your business’s name or address after applying for your EIN.
Then, move on to your S corporation election information:
Boxes E and F: Enter the date you want your S corp status to take effect and select your tax year. Consulting with a professional is a good idea if you want to choose an option other than a calendar year.
Box G: Check this box only if you have over 100 shareholders, but some are family members. You can treat family members as a single shareholder.
Box H: Enter contact info for your legal representative (this could also be you).
Box I: This is where you can make the case for reasonable cause when filing a late election. If there isn’t enough room, feel free to attach a statement instead.
Once you sign and date the information above, you’ll go to page 2. This section asks for shareholder information:
Box J: Enter the names and addresses of the shareholders who must consent to the S corp election.
Box K: Each shareholder must sign and date the form under the consent statement.
Box L: List the number of shares each shareholder owns (or the percentage of the company they own).
Box M: Enter the Social Security number (SSN) for each shareholder (or EIN if the shareholder is a trust, estate, or exempt organization).
Box N: Enter the date each shareholder’s tax year ends (typically Dec. 31).
Part II: Selection of Fiscal Tax Year
Only fiscal-year filers need to complete Part II for tax purposes. You can leave this section blank if you checked the calendar year in Part I.
It’s a good idea to have a tax professional help you fill out this section, but here is a quick summary of what it entails:
Section O: Check the box that applies to your business.
Section P: Select either natural business year or ownership tax year.
Section Q: If you didn’t select anything in Section P, choose your business purpose tax year.
Section R: If you didn’t select anything in Section P or Q, choose your backup fiscal year selection.
Part III: Qualified Subchapter S Trust (QSST) Election
This section won’t apply to many small businesses — it’s only for trusts that own S corp shares and pay all income to the income beneficiary. It asks for the beneficiary’s name, address, and SSN, plus the name and EIN of the trust.
Part IV: Late Corporate Classification Election Representation
You can skip this section if you file Form 2553 within the deadline. If you’re filing a late election, this part simply lists the eligibility requirements you must meet to qualify for late election relief.
Where to send Form 2553 (mailing address & fax number)
You can’t e-file Form 2553, so you’ll need to mail or fax it to the IRS. The Form 2553 mailing address depends on the state where your business is located:
Before sending your form, double-check the IRS “Where to File” page to confirm the mailing address or fax number hasn’t changed. The IRS occasionally updates processing centers, and sending it to the wrong place can delay your S corporation election.
Form 2553 FAQs
How to file IRS Form 2553 with TaxAct
While you can’t e-file Form 2553 (it must be mailed or faxed to the IRS), TaxAct can still help you complete Form 2553 by guiding you through the process while you file taxes.
To enter or review information on Form 2553 in TaxAct:
From within your TaxAct Form 1120 or Form 1120-S return (Online or Desktop), click Federal. (On smaller devices, click the menu in the top left corner, then click Federal.)
Click Miscellaneous, then select Election by a Small Business Corporation as shown in the screenshot below.
Continue with the interview questions, and we’ll help you fill out Form 2553 step-by-step.
The bottom line
Filing Form 2553 is an essential step if you’re looking to take advantage of the tax benefits of being an S corporation. With TaxAct’s help, you can complete Form 2553 accurately and on time, without the stress. Ready? Let’s start filing.
This article is for informational purposes only and not legal or financial advice.
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