Has the 2024 Deadline for registering as S corp passed? Worth it for business income?

For S corporation elections, if you want it to be effective for the entire 2024 tax year, the deadline would have been March 15, 2024 (2 months and 15 days after the beginning of the tax year). However, you can still elect S corp status mid-year, which would give you partial benefits for 2024, and full benefits going forward. Given your income levels, an S corp could potentially save you significant self-employment taxes. With $270k in business income, you're currently paying 15.3% SE tax on the first $168,600 (2024 FICA limit) and 2.9% Medicare tax on all income. With an S corp, you'd only pay those taxes on a "reasonable salary" portion of your earnings, not the distributions.

I went through this exact situation last year with my consulting business! After spending hours researching S corps vs sole proprietorships, I finally used https://taxr.ai to analyze my specific situation. Their system looked at my business structure, income patterns, and potential deductions, then showed me exactly what I'd save with an S corp (about $12k annually in my case). They also explained that while the March 15 deadline passed for a full 2024 election, I could still file Form 2553 and request a late election (they have templates for this) or just make it effective from filing date forward. The step-by-step guidance was super helpful because my situation was complicated with multiple income streams.

I was initially pretty skeptical about using an AI tool for tax planning, but I decided to try taxr.ai after reading about it here. Gotta say, it was actually really helpful for my S corp decision. I uploaded my Schedule C from last year, answered some questions about my business, and it generated a detailed analysis showing I'd save about $14,500 in self-employment taxes even after accounting for all the extra S corp costs like payroll processing and additional tax prep fees. The detailed breakdown helped me convince my accountant it was worth doing. Even though we missed the March deadline for full 2024 coverage, we were able to file Form 2553 with a reasonable cause statement (which the tool helped create) and got approval for a late election. Definitely recommend checking it out if you're on the fence!

If you're trying to contact the IRS about S corp election status or filing a late Form 2553, good luck getting through on the phone these days. I spent THREE DAYS trying to reach someone about my late election before finding https://claimyr.com. You can see how it works here: https://youtu.be/_kiP6q8DX5c They basically wait on hold with the IRS for you, then call you when an agent actually picks up. Saved me hours of frustration dealing with the "call back later" messages. The IRS agent I spoke with confirmed I could still make an S corp election effective from the filing date forward, and explained how to properly document the reasonable cause for filing after the deadline.

I have to admit I was completely wrong about Claimyr. After posting that skeptical comment, I was still fighting with the IRS hold system trying to get information about a late S corp election. Out of desperation, I tried the service. Within 90 minutes, I got a call back and was connected directly to an IRS representative who answered all my questions about the S corp election process. The agent confirmed I could still submit Form 2553 with a reasonable cause statement explaining why I missed the March 15 deadline, and that it would be effective from the acceptance date forward. She also explained exactly what documentation I needed for the reasonable salary determination. This saved me so much time and frustration compared to the previous three weeks of failed attempts to reach someone!

With your income levels, it's definitely worth looking into an S corp. I made the switch when my business hit about $180k and saved around $10k in self-employment taxes the first year. Just remember there are some downsides too: 1) You'll need to run payroll (even if it's just for yourself) 2) Separate tax return for the business (Form 1120-S) 3) More strict record-keeping requirements 4) Potential state fees and franchise taxes Also, the tax savings comes from the split between salary and distributions. If your reasonable salary is $150k and business profit is $270k, you'd save approximately 15.3% on the $120k difference. That's over $18k in potential tax savings, minus the extra costs of maintaining the S corp.

One thing nobody's mentioned yet - the QBI deduction (Qualified Business Income). As a sole proprietor, you currently get to deduct 20% of your qualified business income on your personal return. You still get this with an S corp, but it only applies to the distribution portion, not your salary. With your income levels, you might face phase-out restrictions on QBI deduction anyway since you're married filing jointly and your combined income is above $340k, but it's something to consider in your calculations.