Late Relief for Form 2553: Top Strategies [Illustration + IRS Guidance]

If you’re looking for instructions on how to complete form 2553, you’ve come to the right place. While the form is fairly self-explanatory, there are a few parts that might confuse you. The instructions have been revised as of May 2021, so the layout of the form may have changed.

The title page highlights the address to send your application to. Note that the IRS doesn’t have a street address in Kansas City or Ogden, UT. It has its own zip code.

Background

Form 2553 is a multi-line document that covers the information required to represent an S corporation. It covers a corporation’s rules on late classification and who can be a beneficiary. It requires a beneficiary’s name, address, Social Security number, and a trust’s name and EIN. The last part of the form is only applicable if you’re making an election to represent a corporation as an S corporation.

When filing the form, you should note that the name of the entity must match the name registered with the Secretary of State. The address can be a PO Box number. You’ll also need an employer identification number to file form 2553.

This number can be obtained free of charge. If your business is in the U.S., you’ll need to file Form 2553 with the Internal Revenue Service. This is necessary for your business to be considered a S-Corporation.

To qualify for tax breaks, you must file Form 2553. This document asks information about your organization, fiscal year, shareholders, and more. If you have more than one shareholder, the form may require extra pages.

The IRS will confirm if you qualify as an S-corporation after reviewing your paperwork. If not, you’ll have to make revisions to your paperwork or apply as another operating entity. In either case, it’s important to complete the form as soon as possible.

S-Corporation Tax Benefits

One of the main benefits of operating as an S-Corporation is that the profits and losses from the business pass through to its stockholders. This means that each stockholder pays the same amount of taxes as the corporation, and the shareholders do not pay double tax on the same income.

As a result, a lot of money passes through to shareholders and is taxed at their individual rates. As a result, S-Corporations have many advantages that many small businesses find beneficial.

One of the biggest benefits of an S-Corporation is that early business expenses are deductible as personal income. This allows a company to realize significant business losses without locking them in. A regular corporation would lock those losses into the company. Another S-Corporation tax advantage is liability protection.

Form 2553

Although S corporations shield the owner personally, they still remain liable to creditors and debts. A business owner may want to sell the company to finance retirement. While the company will still be liable for the debts and expenses, it would have reduced the shareholder’s taxable gains when it sold.

Another advantage of an S-Corporation is that it is easier to transfer ownership to other people. It’s possible for an investor to transfer a portion of the ownership to another party, but a shareholder can’t sell the entire business without the other owner’s approval.

It can also be more advantageous to incorporate as an LLC or partnership, since they can use the S-Corporation to avoid taxes.

Late Relief for Form 2553

If you need to make an election on the S corporation status, you can request Late Relief for Form 2553. The service must consider the election as timely if it can establish reasonable cause.

You can apply for relief for both elections by submitting a late Form 2553 and an amended tax return within three years after the effective date of the election. You should include any explanation of reasonable cause for late filing in line I of Form 2553 or in an accompanying statement.

If the corporation that is applying for relief has not filed its tax return for the last six months, it must still file a Form 1120S. The filing deadline for the Form 2553 and 1120S is six months after the due date. However, if the corporation has failed to file its first tax return for the year in which it elected to be an S corporation, it must provide a reason for its late filing.

When applying for Late Relief for Form 2553, you must submit the correct documentation. The corporation must include a statement of shareholder income and expenses. The corporation must also attach a copy of its latest financial statements to the Form 2553.

The corporation must file its return within 3 years and 75 days of the intended effective date of the S election. However, the extension of the current year’s filing deadline will not extend the three-year period.

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