Quick question - does anyone know if there are any exceptions to the reasonable compensation requirement? Like if you're running the S corp as a side business and have a full-time job elsewhere?

@Miguel Ramos - Just to add to what others have said about Form 1125-E, yes you absolutely need to file it even with zero compensation reported. But here's something that might help with the bigger picture: consider setting up a payroll system immediately for 2025 to start taking reasonable compensation going forward. The IRS has been increasingly aggressive about S-Corp reasonable compensation audits, especially for profitable companies. Since you crossed $500K in revenue, you're definitely on their radar now. I'd suggest consulting with a CPA who specializes in S-Corps to establish a defensible compensation strategy - they can help you determine what's "reasonable" in your industry and document the rationale. Also keep in mind that once you start taking W-2 wages, you'll have quarterly payroll tax obligations, so factor that into your cash flow planning. Better to be proactive about compliance than deal with penalties and back taxes later.

Has anyone actually run the numbers both ways? In my experience, filing separately almost never saves money for most couples, especially in Texas which has no state income tax. The only times I've seen MFS work better is with income-based student loan repayment plans or if one spouse has massive medical expenses or casualty losses.

This exact same thing happened to my sister and brother-in-law last year! The "disappearing refund" when combining W-2s is usually because one spouse (or both) had their withholding set up assuming they were the only income earner in the household. At $135k combined income, you're definitely not hitting any major penalty thresholds - this is purely a withholding issue. When you file jointly, the IRS looks at your total household income and applies the tax brackets accordingly, but your individual employers were each withholding based on incomplete information. Before you decide on filing separately, I'd strongly recommend using the IRS withholding calculator on their website to see what your 2025 W-4s should look like. Filing separately might seem appealing now, but you'll likely lose out on valuable credits and deductions that could cost you way more than the few hundred you currently owe. The good news is this is totally fixable for next year once you get your withholdings aligned properly!

Be very careful with Republic Bank TPG processing! Last year my refund got stuck in their system for THREE WEEKS after the IRS released it. The IRS transcript showed "refund issued" but Republic claimed they never received it. Had to file a Case Inquiry Form with their Resolution Department using specific ACH trace numbers from the IRS. The issue was their internal Refund Clearing System (RCS) had flagged my account for "verification" but never actually reviewed it. Make sure you monitor both your IRS transcript AND Republic's portal.

Did you opt for fees taken from refund? That matters. Creates extra steps. Republic holds funds longer. Different processing path. Worth checking.

Just a heads up - if you filed with certain tax credits (like Earned Income or Additional Child Tax Credit), even after approval there's sometimes an extra 1-2 day hold before release. That happened to me this year.

Congrats on getting approved! 🎉 From my experience, it's usually 2-3 business days once WMR shows approved. I'd suggest checking if there's a specific deposit date shown on your transcript - that's usually the most accurate timeline. If you're not sure about paying bills right away, maybe just pay the most urgent ones and wait a couple days for the rest? Better safe than sorry! Also, make sure your bank account info was correct when you filed - that's the most common reason for delays after approval.

Has anyone recently formed a C Corp in a state different from where they live? I'm considering Wyoming or Nevada for better privacy laws while I live in California. Any tax implications I should know about?

I actually went through this exact decision process about 18 months ago and ended up choosing the C Corp route. Like you, I wanted complete separation between business and personal taxes, and the C Corp structure delivered exactly what I was looking for. The key advantage of going straight to C Corp formation versus S Corp with tax election is simplicity and clarity. When you form a C Corp from the start, there's no ambiguity about tax treatment - you're automatically taxed as a separate entity. The administrative burden isn't significantly different from an S Corp if you're already planning to run things professionally with proper bookkeeping. One thing I wish I had considered more carefully is the "reasonable compensation" requirement. As a C Corp owner-employee, you need to pay yourself a reasonable W-2 salary before taking any distributions. The IRS scrutinizes this pretty closely, so make sure you research what constitutes reasonable compensation in your industry. Also consider your long-term plans. If you ever want to convert back to pass-through taxation later, it's much easier to go from S Corp to C Corp than the reverse. But if you're certain about wanting that tax separation, C Corp is definitely the cleaner path forward.