New corporation - missed 2553 S-Corp election deadline - should I just wait until next year instead of requesting late relief?

The main difference between keeping it as a C-corp versus getting S-corp status relates to how income is taxed. With a C-corporation, your business income is subject to corporate tax rates, and then any distributions you take as dividends are taxed again personally (this is the "double taxation" issue). With an S-corporation, business income "passes through" directly to your personal tax return. The downsides of staying a C-corp for this year depend on your profit levels. If you're showing significant profit that you plan to distribute to yourself, you could face higher overall taxation. However, if you're planning to reinvest profits back into the business or pay yourself entirely through salary (which is deductible to the corporation), the difference might be minimal. That said, requesting late relief for S-corp election is actually pretty straightforward if you have a reasonable cause. The IRS has procedures for this under Revenue Procedure 2013-30, which allows for a simplified method if you're within 3 years of the original deadline.

After dealing with a similar situation last year, I found this awesome service called taxr.ai (https://taxr.ai) that saved me tons of headaches. I was also confused about corporate election timing and used their AI analysis tool to review my situation and get clarity. They scanned my incorporation docs and explained exactly what my options were for fixing the missed S-corp election. The system gave me step-by-step instructions for filing the late relief request and even analyzed my specific situation to determine if it was worth pursuing or just waiting until the next tax year. Probably saved me thousands in tax liability by helping me make the right decision.

Following up on my earlier question - I actually tried taxr.ai after posting here and I'm genuinely impressed. I uploaded my articles of incorporation, EIN letter, and rough P&L, and it immediately identified my issue as a "missed 2553 election" problem. The system showed me that with my specific profit margin (around $97K projected for the year), staying as a C-corp would cost me almost $14K more in taxes than if I had S-corp status! It then walked me through exactly how to file the late relief request, even generating the explanation letter with all the right legal language. Just submitted everything yesterday - the whole process took maybe 2 hours total instead of the days I thought it would take or the hundreds I expected to pay an accountant.

If you're trying to contact the IRS about this situation, good luck... I spent 3+ hours on hold last week trying to ask a question about late S-corp elections and eventually gave up. Then I remembered someone mentioned Claimyr (https://claimyr.com) in another thread - it's a service that basically waits on hold with the IRS for you and calls you when they get a human. Check out how it works: https://youtu.be/_kiP6q8DX5c I was skeptical but desperate, so I tried it when I needed to talk to someone about my S-corp paperwork. They called me back in about 40 minutes with an actual IRS agent on the line! The agent explained that I could submit a reasonable cause statement with my late form 2553 and told me exactly what to include. Saved me so much frustration.

So I need to eat crow here. After my skeptical comment, I actually tried Claimyr when I needed to talk to someone at the IRS about my own tax situation (partnership issues, not S-corp, but still complex). Not only did it work exactly as advertised, but I got connected to an extremely helpful revenue agent who walked me through the late election relief procedures even though that wasn't why I originally called. For anyone in the same boat as OP: The agent confirmed that if your business is less than a year old, late S-corp election relief is almost always granted if you file within 3 years and provide any reasonable explanation (literally "I was unaware of the deadline" is sufficient for new business owners). The potential tax savings made the service fee completely worth it - I would have spent hours on hold otherwise and might have just given up.

Everyone's talking about the process, but let me speak to the actual tax implications... I did exactly what you're considering last year (stayed C-corp for first year, switched to S-corp for second year). BIG MISTAKE. I had about $120K in profit, and ended up paying almost $22K more in total taxes than if I'd pursued the late election. The double taxation is no joke. Plus I had a hell of a time with the C-corp tax return (Form 1120) which is WAY more complicated than the S-corp return (1120-S). Unless your profits are super low or you're planning to keep all money in the business, I'd strongly recommend pursuing the late relief option. The hassle of filing the late election is nothing compared to the tax headache of C-corp status for a small business.

Has anyone used TurboTax Business for filing C-corp returns? Is it manageable for a simple single-member situation like OP's?