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An S corporation is a business that elects to pass income, losses, deductions, and credits through to its shareholders for federal tax purposes.
The S corporation generally doesn't pay federal income tax.
Instead, the income passes through to the shareholders who reported it on their individual tax returns.
To be treated as an S corporation, the business must file Form 2553 with the IRS.
This election must be submitted by the 15th day of the third month of the first tax year.
There are situations where an S corporation is subject to an entity or corporate level tax.
S Corporations file an Information Return 4 and 1120 S and provide each shareholder with a Schedule K1 showing their share of income, deductions, and credits.
For more information on the S corporation structure and how to file, visit IRS.gov and type in S Corporations in the search box.
Also visit the Small Business and Self-employed Tax Center for more resources and guidance.