Form 2553: How to File an S Corp Tax Election

To file an S Corp tax election, you need to complete IRS Form 2553 — Election by a Small Business Corporation — and submit it by mail or fax to the IRS. The form must be filed within two months and 15 days of the start of the tax year you want the election to take effect.

Form 2553 is the IRS form a corporation or eligible LLC files to elect S Corporation tax status. The official name is Election by a Small Business Corporation. Filing it tells the IRS you want your business taxed under Subchapter S of the Internal Revenue Code rather than as a standard C Corporation.

Once the election is approved, income, losses, deductions, and credits pass through to shareholders and get reported on their personal tax returns. The business itself doesn't pay federal income tax at the entity level. That's the core difference between an S Corp and a C Corp — and it's why many small business owners pursue this election.

Not every business qualifies for S Corp status. Before filing Form 2553, your business needs to meet all of the IRS eligibility requirements. Missing even one disqualifies the election.

• Must be a domestic corporation or an LLC that has elected to be treated as a corporation
• No more than 100 shareholders
• All shareholders must be U.S. citizens or permanent residents — no nonresident alien shareholders
• Only one class of stock is allowed
• Shareholders must be individuals, certain trusts, or estates — not partnerships, corporations, or most LLCs
• The business cannot be an ineligible corporation type, such as certain financial institutions or insurance companies

If your business is an LLC, you'll need to file Form 8832 to elect corporate tax treatment before — or at the same time as — filing Form 2553. A tax professional can help you figure out the right sequencing for your situation.

The main reason business owners file Form 2553 is to reduce their overall tax burden. The S Corp election can lower both federal income tax and self-employment tax — but the savings depend on how much your business earns and how you structure owner compensation.

Avoid double taxation

C Corporations pay corporate income tax on profits. Then shareholders pay personal income tax on any distributions they receive. That's two layers of tax on the same money. With an S Corp election, the business doesn't pay federal income tax at the entity level — profits pass through directly to shareholders, who report them on their personal returns.

Lower self-employment tax

S Corp owners who work in the business must pay themselves a reasonable salary as a W-2 employee. Payroll taxes apply to that salary. But any remaining profits distributed beyond the salary aren't subject to self-employment tax. For business owners with strong profits, this split can reduce the total tax bill. The IRS scrutinizes unreasonably low salaries, so the salary needs to reflect what you'd pay someone else to do the same work.

Form 2553 has four parts. Most small businesses only need to complete Parts I and II. Parts III and IV apply to specific situations — qualified subchapter S trusts and late elections under certain IRS procedures.

Part I: election information

This section captures your business's basic identifying information and the details of the election itself.

• Business name, address, and Employer Identification Number (EIN)
• Date incorporated and state of incorporation
• Tax year the election should take effect
• Selected tax year — calendar year or fiscal year
• Officer or legal representative signature

Part II: shareholder consent

Every shareholder who held stock during the period the election covers must sign Part II. Each shareholder provides their name, address, Social Security number or EIN, number of shares held, and the date they acquired those shares. If any shareholder doesn't sign, the election is invalid — this is the step that catches people off guard most often.

The deadline for filing Form 2553 depends on when you want the S Corp election to take effect. Getting the timing right matters — file too late and the election won't apply until the following tax year.

• For the election to apply to the current tax year: file within 2 months and 15 days of the start of that tax year
• For a new corporation or LLC: file within 2 months and 15 days of the date the business was formed or began doing business
• For the election to apply to the following tax year: file any time during the current tax year
• Calendar year businesses: the deadline to elect for the current year is generally March 15

If you miss the deadline, you may still qualify for late election relief. The IRS allows late elections in certain circumstances — see the Late elections and relief section below.

Form 2553 is filed by mail or fax — there's no online submission option through the IRS. The correct mailing address or fax number depends on where your business's principal office is located.

The IRS Form 2553 instructions include a table of mailing addresses and fax numbers organized by state. Look up your state in that table before submitting. Sending to the wrong address can delay processing or result in the form not being received.

If you file by mail, send the form via certified mail with return receipt so you have proof of the submission date. The IRS doesn't send an automatic acknowledgment when it receives Form 2553 — you'll get a CP261 notice once the election is approved, which usually takes 60 days or more.

If you missed the Form 2553 deadline, you may still be able to get the election approved for the intended tax year. The IRS provides late election relief under Revenue Procedure 2013-30 for businesses that can show reasonable cause for the delay.

To request late relief, you file Form 2553 with a statement explaining why the election wasn't filed on time. The form must be filed no later than 3 years and 75 days after the intended effective date. All shareholders who held stock during the period must still sign. A tax professional can help you figure out whether your situation qualifies and how to write the reasonable cause statement.

There's no IRS filing fee for Form 2553. The election itself is free to submit.

One exception: if you check box Q1 on the form — which applies when you're requesting a fiscal tax year based on a business purpose — the IRS charges a user fee of $6,200 as of the current fee schedule. Most small businesses use a calendar year and won't need to check that box.

If you work with a tax professional or a business formation platform to prepare and file the form, their service fees apply separately. Those costs vary depending on the provider and the complexity of your situation.