Benjamin, I feel your pain on this one! I went through something similar with my consulting business a few years back. The 5-year waiting period is brutal, but you do have some legitimate options beyond just waiting it out. Based on what you've described, I'd focus on the "reasonable cause" exception that others have mentioned. The fact that you revoked the S election when your business income was minimal ($40k) and you had a full-time job suggests you made a reasonable business decision at the time - not a tax avoidance scheme. Now that your circumstances have completely changed (full-time business, $180k projected income), you have a strong case for demonstrating that the original revocation wasn't primarily for tax benefits. The IRS has approved similar requests when taxpayers can show genuine business reasons. I'd recommend documenting everything: your income levels in 2023, your employment status change, projections for this year, and any advice you received that led to the original revocation. This paper trail will be crucial for your letter ruling request. The private letter ruling route isn't cheap (around $3,000-$7,000 in fees), but with your projected income level, the S corp tax savings would likely justify the cost. Just make sure you work with someone experienced in these types of requests - the formatting and arguments matter a lot. Don't give up! The IRS rejection letter is just their standard response, but exceptions do exist for situations like yours.

Benjamin, I've been following this thread and wanted to add another perspective based on my experience with S corp elections. You mentioned you've been relying on "random internet advice" - that's actually more common than you think, and it might work in your favor for the reasonable cause exception. The IRS recognizes that small business owners often make decisions based on general guidance available at the time. What matters is that you made a rational business decision given your circumstances (part-time business, minimal income, full-time employment). One thing I haven't seen mentioned yet is the timing of your quarterly estimated payments. Since you're projecting $180k this year and currently operating as an LLC, you're facing self-employment tax on the full amount. That's roughly $25k+ in SE tax alone that S corp status could help reduce significantly. Given the urgency of your tax situation, I'd actually recommend pursuing multiple approaches simultaneously: 1. File for the private letter ruling as others suggested 2. Consider the new entity approach (with proper legal structure to avoid substance-over-form issues) 3. Document everything about your 2023 decision-making process while it's still fresh The cost of professional help now is likely far less than the tax consequences of staying in LLC status for another 2+ years. Don't let the initial rejection discourage you - the IRS form letters rarely tell the whole story about available options.

Just to add a data point - I've been in this exact situation (work in Nevada, live in Arizona) for 3 years. I use FreeTaxUSA and it handles it perfectly. You're right that Nevada has no state income tax so you only need to file an Arizona return, but you do need to report all your income to Arizona since you're a resident. One thing nobody mentioned yet - if you spend a lot on gas for that commute, keep track of those expenses! While you can't deduct commuting expenses generally, if your employer reimburses you for any business travel (separate from commuting), that could be tax-relevant.

Great thread! I'm actually a tax preparer and wanted to clarify a few things I'm seeing in the responses. You're absolutely correct that Nevada has no state income tax, so ignore any "withholding" you think you're seeing for Nevada state taxes - that's likely something else on your paystub. Since you're an Arizona resident, you'll file a full Arizona resident return reporting ALL your income, including what you earned in Nevada. Arizona taxes you on worldwide income as a resident. A few practical tips: 1) Consider asking your employer to withhold additional federal taxes that you can apply toward your Arizona state tax liability, 2) You might want to make estimated quarterly payments to Arizona to avoid underpayment penalties, and 3) Keep excellent records of your work location if you ever work from home in Arizona - those days create Arizona-sourced income. The standard tax software like TurboTax, H&R Block, or FreeTaxUSA can absolutely handle this situation. You don't need a professional unless you have other complicating factors. This is actually one of the simpler multi-state scenarios since Nevada has no income tax!

Another approach nobody's mentioned yet is charitable remainder trusts. I sold my software company in 2022 and put a portion of my shares into a CRT before the sale. I avoided immediate capital gains tax on that portion, got a nice charitable deduction, and still receive income from the trust for the next 20 years!

Great question about minimizing taxes on your business sale! I went through this exact situation 18 months ago with my digital marketing agency (sold for $2.1M). Here are the key strategies that saved me significant money: **Timing is everything** - I pushed my sale to January to reset my tax year and spread some income recognition. Also considered my other income sources that year to manage overall tax brackets. **Asset vs Stock Sale Structure** - This was huge for me. We structured it as an asset sale which allowed me to allocate purchase price to different assets (goodwill, customer lists, equipment, etc.) with varying tax treatments. Some were capital gains, others ordinary income, but the overall effective rate was much better. **Earnout provisions** - Part of my deal was structured as an earnout over 3 years based on performance metrics. This spread the tax liability and kept me in lower brackets each year rather than one massive hit. **State tax planning** - I actually temporarily relocated to a no-capital-gains-tax state (Nevada) for the sale year. This alone saved me about $140K in state taxes. Obviously verify this works for your situation and follow all residency requirements. Definitely get a tax attorney who specializes in business sales, not just a regular CPA. The specialized knowledge pays for itself many times over. Feel free to ask if you want more details on any of these strategies!

As someone who just went through this exact same confusion with the 2025 W4, I wanted to share what finally clicked for me after reading through all these great responses. The biggest "aha moment" was realizing that the new W4 is designed to be more precise, but that means you actually need to think about your specific tax situation rather than just throwing numbers at it like we could with the old allowances system. Here's what worked for me: I gathered my last year's tax return and calculated roughly what my effective tax rate was, then used the IRS withholding estimator about halfway through the year to see if I was on track. When I realized I was underwithholding, I added $50 per paycheck to Step 4(c) rather than trying to manipulate the dependent credits. The key insight from this thread is that Step 3 is ONLY for actual dependents you'll claim, Step 4(b) is for additional deductions you'll actually take, and Step 4(c) is your "safety valve" for fine-tuning the withholding amount when the other steps don't quite get you where you need to be. Thanks to everyone who shared their experiences - this thread should be required reading for anyone dealing with the W4 changes!

This thread has been incredibly helpful! As someone who just started a new job and was completely lost with the 2025 W4 form, I really appreciate everyone breaking down the differences from the old allowance system. I'm in a similar boat to the original poster - I used to just adjust my allowances when I wanted to change my withholding, but now I understand that the dependent credits in Step 3 are strictly for actual dependents I'll claim on my tax return. Based on all the advice here, I think my plan is to: 1. Use Step 4(c) to add a small amount of extra withholding since I'd rather get a small refund than owe 2. Check the IRS withholding estimator in a few months to see how I'm tracking 3. Remember that I can always submit a new W4 if adjustments are needed One quick question - for someone who's single with no dependents and just has W2 income, is it pretty safe to just fill out Steps 1 and 5, maybe add a little extra in Step 4(c), and call it good? Or are there other sections I should be considering even for a simple situation like mine? Thanks again to everyone who shared their experiences and knowledge!

Thank you all for this incredibly helpful discussion! As someone who just turned 70½ and is starting to think about RMDs in a few years, this has been eye-opening. I had no idea that QCDs had to be direct transfers from the IRA custodian to the charity - I definitely would have made that mistake of taking the distribution first and then donating it myself. A few follow-up questions if anyone has experience with this: 1. Do all IRA custodians handle QCD transfers the same way, or are some better than others at processing these direct charitable transfers? 2. If I have multiple IRAs with different custodians, can I split my QCDs across them, or is it better to consolidate for easier record-keeping? 3. For the charitable acknowledgment letters, do they need to specifically mention that the donation came from an IRA distribution, or is a standard donation acknowledgment sufficient? I'm trying to get all my ducks in a row before I actually need to start taking RMDs. This thread has already saved me from what would have been some costly mistakes!

One thing I haven't seen mentioned yet is the timing consideration for QCDs. If you're planning to use QCDs to satisfy your RMD, make sure you complete the charitable transfers before December 31st of the tax year. Unlike regular RMDs which you can take up until the following April 15th for your first RMD year, QCDs must be completed by the calendar year end to count toward that year's RMD requirement. Also, if you're married and both spouses have IRAs, each person gets their own $100,000 QCD limit - but you can't combine or transfer unused limits between spouses. So if one spouse wants to do a larger charitable distribution, they're still capped at $100,000 individually. I learned this the hard way when I tried to do a $150,000 QCD in late December thinking I could use both mine and my wife's limits from my IRA. Had to scramble to redirect $50,000 to her IRA first, then do separate charitable transfers. Much easier to plan this stuff in advance!