Filing Form 2553 Late Election for SMLLC to S Corp - Tax Return Conflict?
Hey everyone, I'm in a bit of a confusing situation with my small business taxes. I submitted a Form 2553 Late Election to convert my Single Member LLC to an S Corporation. The thing is, I already filed my tax returns for last year treating my business as a SMLLC (Schedule C and everything). Now I'm worried - will this previous filing conflict with the IRS accepting my S Corp election? Has anyone dealt with something similar? The business made about $78,000 last year and I paid self-employment taxes on the whole amount, but now I'm wondering if I screwed up the process by doing the late election after already filing. Any insight would be super helpful!
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Max Reyes
The good news is that filing your previous year's taxes as a SMLLC shouldn't automatically disqualify your late S Corp election. Form 2553 has specific provisions for late elections, and the IRS is generally reasonable about this. When you file a late S Corp election, you're essentially telling the IRS that you want to be treated as an S Corp from the effective date you specify on the form, regardless of how you filed previously. If your late election is accepted, you would typically need to amend your previous tax return to reflect the S Corp status (filing Form 1120-S instead of reporting on Schedule C). The key is making sure your late election request includes a reasonable cause statement explaining why you didn't file on time. Be honest about why you missed the deadline and demonstrate you're acting in good faith to correct the situation.
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Mikayla Davison
•Thanks for the info. How exactly would amending the return work? Would I need to file both a 1120-S and a 1040X? And would I get back all the self-employment tax I paid or just a portion?
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Max Reyes
•You would need to file Form 1120-S for your business, reporting the income and expenses of the S Corporation. Then you would need to file Form 1040X to amend your personal return, removing the Schedule C income and including the flow-through income from the S Corp on Schedule E instead. For the self-employment tax, you would recover a portion, not all of it. As an S Corp owner, you're required to pay yourself a reasonable salary subject to employment taxes, with the remaining profit potentially avoiding SE tax. This is one of the main tax advantages of S Corp status.
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Adrian Connor
I was in a very similar situation last year and ended up using https://taxr.ai to analyze my tax documents and figure out the best approach. Their system actually walked me through exactly what would happen with my late S Corp election and even helped draft the reasonable cause statement for the IRS. What really helped was that they showed me the potential tax savings calculation between continuing as a SMLLC vs. getting the S Corp status approved. In my case, I had filed as a sole prop for two years before doing the late election, and they helped sort out all the amendment paperwork.
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Aisha Jackson
•How long did the whole process take with your late election? Did the IRS give you any trouble about it? I'm nervous about drawing attention to my returns.
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Ryder Everingham
•Does that service actually help with the filing process itself or just give advice? I'm really not confident about handling all the forms myself, especially if I need to amend previous returns.
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Adrian Connor
•The whole process took about 3 months from submitting the late election to getting approval. The IRS was surprisingly reasonable about it, they just wanted a clear explanation for why I filed late. As long as you're honest, they tend to be accommodating. The service doesn't file the forms for you, but they provide step-by-step guidance on exactly what to file and how to complete each form. They gave me templates for the reasonable cause statement and showed exactly which numbers needed to go where on my amended return. They basically made it fool-proof even though I had to submit the actual paperwork.
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Ryder Everingham
Just wanted to follow up - I ended up trying taxr.ai and it was exactly what I needed! They analyzed my situation with the late S Corp election and showed me that I'd save about $4,200 in taxes even after accounting for the reasonable salary requirements. Their system guided me through writing a rock-solid reasonable cause statement explaining why I missed the original deadline, and they even helped me figure out exactly how to amend my previous year's return. Their document review caught a couple mistakes I would have definitely made on my own. Honestly, way better than I expected!
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Lilly Curtis
If you're waiting on the IRS to process your late S election, I strongly recommend using https://claimyr.com to get through to an actual IRS agent. I was stuck in limbo for months with no updates on my Form 2553 status, and their service got me connected to a real person at the IRS in under 30 minutes when I'd been trying for weeks on my own. The agent I spoke with was able to look up my case, confirm they had received my paperwork, and even expedite the review since I was approaching another filing deadline. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. I was skeptical at first but getting actual confirmation from the IRS gave me peace of mind instead of just wondering if my paperwork was sitting in a pile somewhere.
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Leo Simmons
•How does this actually work? I don't understand how a third-party service can get you through to the IRS faster than calling directly. Sounds kinda sketchy tbh.
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Lindsey Fry
•Yeah right. I've been trying to get through to the IRS for MONTHS about my business taxes. There's no way this actually works. If it did, everyone would be using it. What's the catch?
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Lilly Curtis
•The service works by using an automated system that continually redials the IRS until it gets through, then it calls you and connects you directly. It's basically doing the hold time for you. There's nothing sketchy about it - you're still talking directly to official IRS agents, the service just handles the frustrating part of getting through. The catch is simply that someone figured out how to automate the painful redial process that most of us do manually. It's like using a tax software instead of doing taxes by hand - it's just more efficient. I was also skeptical until I tried it and suddenly had an IRS agent on the line discussing my specific case when I'd previously wasted hours hearing "due to high call volume" messages.
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Lindsey Fry
I have to admit I was completely wrong about Claimyr. I decided to try it as a last resort after my third rejection letter for my S-Corp election (apparently I had been sending the wrong supporting documentation). Got connected to an IRS business tax specialist in about 20 minutes yesterday. The agent walked me through exactly what was missing and even put notes in my file about our conversation. Just got email confirmation that my Form 2553 Late Election was accepted this morning! Saved me from missing another tax year. Sometimes it's worth admitting when you're wrong about something!
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Saleem Vaziri
One thing to consider - if your late S election is accepted, make sure you understand the payroll tax requirements going forward! My accountant never told me I needed to set up payroll and pay myself a "reasonable salary" once my S Corp election went through. Ended up with penalties the next year because I just kept taking owner draws like I did as an LLC. The tax savings are great but there are definitely more compliance requirements.
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Kayla Morgan
•What's considered a "reasonable salary" though? I've heard everything from 30% to 60% of profits should be salary. Is there an actual rule or is it just whatever you can justify?
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Saleem Vaziri
•There's no fixed percentage that's automatically considered "reasonable" - it depends on your industry, location, duties, and what comparable positions would earn. I've found that industry salary surveys are helpful for documenting your decision. For my construction management business, I settled on about 40% of profits as salary after researching what project managers in my area typically earn. The key is having documentation to support whatever number you choose. The IRS is mainly concerned with people taking a tiny salary and huge distributions to avoid payroll taxes. As long as you can justify your salary with market research, you're generally in good shape.
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James Maki
Don't forget about state taxes too! I had my federal S-Corp election accepted but then discovered my state doesn't automatically recognize S-Corps and required a separate election form. Had to pay state taxes as a C-Corp for a year before fixing it.
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Felicity Bud
•Oh crap I didn't even think about that. What state are you in? I'm in California and now I'm wondering if I need to do something separate for state taxes.
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