Q：
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What is S Corporation?
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A：
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S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income.
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Q：
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How to qualify for S Corporation status?
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A：
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To qualify for S corporation status, the corporation must meet the following requirements:
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1.
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Be a domestic corporation;
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2.
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Have only allowable shareholders;
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May be individuals, certain trusts, and estates and
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May not be partnerships, corporations or non-resident alien shareholders
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3.
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Have no more than 100 shareholders;
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4.
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Have only one class of stock;
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5.
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Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).
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Q：
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What form do I need to file with Federal and State?
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A：
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In order to become an S corporation, the corporation must submit Form 2553 Election by a Small Business Corporation signed by all the shareholders.
States impose tax laws and regulations for corporate income and distributions, some of which may be directed specifically at S Corporations. Some but not all states recognize a state tax law equivalent to an S corporation, so that the S corporation in certain states may be treated the same way for state income tax purposes as it is treated for Federal purposes. A state taxing authority may require that a copy of the Form 1120S return be submitted to the state with the state income tax return.
Some states such as New York and New Jersey require a separate state-level S election in order for the corporation to be treated, for state tax purposes, as an S corporation.
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Q：
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What is the tax filing requirements for S Corporation?
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A：
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S Corporation needs to file Form 1120-S to report the income, gains, losses, deductions, credits, etc. Form 1120-S generally must be filed by March 15 of the year immediately following the calendar year covered by the return or, if a fiscal year (a year ending on the last day of a month other than December) is used, by the 15th day of the third month immediately following the last day of the fiscal year. The corporation must complete a Schedule K-1 for each person who was a shareholder at any time during the tax year and file it with the IRS along with Form 1120S. The second copy of the Schedule K-1 must be mailed to the shareholder.
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FAQ
