Missed March 15 S-corp election deadline - any late relief options?

I screwed up bad. Formed my LLC in January 2025 and was planning to elect S-corp status to save on self-employment taxes. My CPA told me I needed to file Form 2553 by March 15 to be effective for this tax year.

Long story short, things got busy with product launch and I completely missed the deadline. It's now July and I'm realizing I'm going to get killed on SE taxes if I can't fix this.

Are there any late election relief options? Or am I stuck paying full SE tax for 2025?

Oof, I almost made this same mistake. My understanding is there's something called "late election relief" under Rev. Proc. 2013-30. Might want to look into that.

You're not necessarily stuck. Rev. Proc. 2013-30 provides late election relief if you meet certain conditions:

• You intended to elect S-corp status and failed to file timely through inadvertence
• Your entity and all shareholders reported income consistent with S-corp status (or you haven't filed yet)
• You file the late election within 3 years and 75 days after the effective date you wanted

Since you formed in January 2025 and it's only July, you're well within the time window.

That's a relief to hear! What exactly do I need to file? Is it just the Form 2553 with a statement explaining why I'm late?

You need to file Form 2553 with a statement at the top that says "FILED PURSUANT TO REV. PROC. 2013-30"

The statement should include:

1. The election was intended but not made timely
2. The failure to file was inadvertent (explain what happened - product launch got busy, etc.)
3. That you've treated the entity as an S-corp for tax purposes (or haven't filed returns yet)
4. Request for reasonable cause relief

Important: Write at the top of Form 2553 the date you're treating as the effective date (probably January 1, 2025 in your case).

Just to add to what Rachel said - make sure all shareholders sign Form 2553. Even though you're probably a single-member LLC, you still need your signature as the sole shareholder consenting to the election.

Also, since you haven't filed quarterly payroll taxes yet (assuming you haven't), you'll need to get that set up ASAP. S-corps require reasonable compensation via W-2, which means payroll taxes.

Wait, so I need to do payroll now? I thought the whole point was to avoid self-employment tax by taking distributions instead of salary.

Common misconception. You MUST pay yourself a "reasonable salary" as a W-2 employee before taking distributions. The IRS is very strict about this.

The tax benefit comes from taking SOME as salary (subject to payroll taxes) and the REST as distributions (not subject to SE tax). If you take zero salary and only distributions, the IRS will reclassify everything as wages and you'll owe back taxes plus penalties.

What's "reasonable" depends on your industry, role, location, and company revenue. Generally $40-80K for a working owner-operator, but varies.

I did late S-corp election last year using Rev. Proc. 2013-30. IRS approved it no questions asked. Took about 6 weeks to get the acceptance letter.

One tip: send it certified mail so you have proof of filing date. Also keep copies of everything for your records.

Update: Talked to my CPA yesterday. She's preparing the Form 2553 with the late relief statement. Said I should be fine since I haven't filed any 2025 returns yet and we're well within the 3 year window.

Also setting up payroll through Gusto. Going with $60K salary and taking the rest as distributions. Should save me about $8K in taxes vs straight Schedule C.

Thanks everyone for the guidance. Would have panicked way more without this thread.

Just circling back to this thread since we're in tax planning season. For anyone reading this in late 2025 who wants S-Corp election for 2026, the deadline is March 15, 2026 (or within 2 months and 15 days of forming your LLC if you form in 2026).

Set a calendar reminder NOW. Seriously, I can't tell you how many clients miss this deadline every year and then we're scrambling with late election relief requests.

Also worth noting: the IRS has been more strict about granting late election relief in 2025. They're requiring more detailed explanations and documentation than in previous years. Don't assume you can just file late and get automatic approval.