How to Backdate Your S-Corp Election

What does backdating your S-Corp election mean?

Backdating an S-Corp election means you're asking the IRS to treat your business as an S-Corporation starting from an earlier date than when you actually filed the paperwork. Think of it like this: you meant to RSVP to a party by March 15, but you forgot. The IRS has a process that lets you say "I always intended to come" and still get credit for showing up on time.

For tax purposes, this can mean the difference between paying 15.3% self-employment tax on your entire business profit versus only paying it on your reasonable salary.

Important deadlines for S-Corp election

Before we talk about backdating, let's understand the standard deadline.

For 2026: If you want S-Corp status for the entire 2026 tax year, you must file Form 2553 by March 16, 2026 (within 2 months and 15 days after January 1).

For new businesses: You have 2 months and 15 days from when your business officially starts (when you get shareholders, acquire assets, or begin operating).

Example: Sarah forms her LLC on January 7, 2026. She has until March 21, 2026 to file Form 2553 if she wants S-Corp treatment for all of 2026.

Can you really backdate your S-Corp election?

Yes! Thanks to IRS Revenue Procedure 2013-30, the IRS provides relief for businesses that miss filing deadlines due to reasonable cause. You can even backdate your election to a previous tax year.

Here's what's possible in 2026:

• It's February 2026: You can still elect S-Corp status back to January 1, 2026
• It's November 2026: You can still go back to January 1, 2026
• It's March 2027 (during tax season): You can still backdate to January 1, 2026—that's going back to the previous year

The key window is 3 years and 75 days from your intended effective date. That means if it's early 2026 and you just discovered S-Corps, you could potentially backdate to January 1, 2023, if you meet all the requirements!

4 requirements for backdating your S-Corp election

As with most anything, the IRS isn't just going to hand you a free pass. You need to meet four core requirements:

1. You always intended to be an S-Corp

You need to show you genuinely wanted S-Corp status from the beginning, and have evidence demonstrating this intent, including:

• Setting up payroll for yourself
• Consulting with tax professionals about S-Corps
• Operating your business in a way consistent with S-Corp rules
• Emails or notes discussing S-Corp elections

2. You only failed to qualify because you missed the deadline

Your entity must have failed to qualify as an S-Corp solely because the election was not filed on time. Everything else about your business needs to check out:

• You're a domestic corporation or LLC
• You have 100 or fewer shareholders
• All shareholders are individuals, estates, or certain trusts (no corporate shareholders)
• You have only one class of stock

3. You have "reasonable cause" for filing late

This is where many people worry unnecessarily. The IRS has historically placed a low threshold on the reasonable cause requirement. Common acceptable reasons include:

• "I didn't know I needed to file a separate election for S-Corp status"
• "My accountant didn't file it"
• "I just learned about S-Corps and the tax benefits"
• "I thought forming an LLC automatically made me an S-Corp"
• "I relied on incorrect professional advice"

Keeper pro tip: You cannot simply say "I just learned about S-Corps and they sound amazing, so I want to backdate to save taxes." You need to demonstrate you intended it all along or had a legitimate misunderstanding.

4. Everyone reported income consistently

The entity and all shareholders must have reported their income consistent with an S-Corp election. This means:

• You filed tax returns as if you were an S-Corp
• If you haven't filed returns yet for the backdated year, you'll file them correctly as an S-Corp
• All shareholders are on the same page

How to backdate your S-Corp election

Do you meet the above qualifications? Great! Let's backdate your S-Corp election and get you those tax savings!

Step 1: Verify you're within the time window

Calculate whether you're within 3 years and 75 days of your intended effective date. For example:

• Want to backdate to January 1, 2025?
• You have until March 17, 2028 to file for late relief

Step 2: Complete Form 2553

Download Form 2553 from the IRS website. Fill it out completely, including:

• Your business information
• Intended effective date (the date you want the election to start)
• All shareholder information and signatures

Step 3: Add the magic words

At the top of Form 2553, write "FILED PURSUANT TO REV. PROC. 2013-30" in large, clear letters. This tells the IRS you're requesting late election relief.

Step 4: Write your reasonable cause statement

This goes in Part I, Line I of Form 2553. Keep it simple and honest.

Example statement:

"The taxpayer was not aware of the requirement to make a separate election to treat a single-member LLC as an S-Corporation for federal tax purposes. The taxpayer intended to be treated as an S-Corporation effective January 1, 2025 and began paying shareholder-employees accordingly. Upon discovering the oversight in November 2025, the taxpayer immediately prepared Form 2553 to request late election relief under Rev. Proc. 2013-30."

Another example:

"The taxpayer engaged a tax professional to handle the S-Corporation election in early 2025. The taxpayer believed the election was filed, but discovered in tax season 2026 that Form 2553 was never submitted to the IRS. The taxpayer has operated consistently as an S-Corporation since January 1, 2025, maintaining payroll and proper corporate records. Upon discovering this oversight, the taxpayer immediately took action to correct it."

Step 5: Get all shareholder signatures

Every shareholder must sign the form consenting to the election. If you're the only shareholder, that's just you.

Step 6: Submit to the IRS

You have three options:

1. Mail it to the appropriate IRS Service Center (address is in the Form 2553 instructions). Use certified mail so you have proof of delivery.
2. Fax it to the IRS (fax number is in the Form 2553 instructions)
3. Attach it to your S-Corp tax return (Form 1120-S) for the first year. If you do this, write at the top of the return: "INCLUDES LATE ELECTION(S) FILED PURSUANT TO REV. PROC. 2013-30"

Step 7: Wait for the IRS to respond

The IRS will mail you a notice:

• CP261: Congratulations! Your election is approved
• CP264: Your election was rejected, with an explanation why

Save your approval notice. You'll need it for your records!

How does backdating save you money?

Meet Jason, a freelance web developer who formed his LLC in January 2025. He earned $120,000 in net business income during 2025.

Scenario 1: No S-Corp Election (Regular LLC)

• Self-employment tax (15.3%) on $120,000 = $18,360
• After deductions, he still pays around $16,000+ in self-employment tax

Scenario 2: Successful Backdated S-Corp Election

• Reasonable salary to himself: $65,000
• Remaining profit as distribution: $55,000
• Self-employment tax on salary only: ~$9,945
• Savings: Over $6,000

In March 2026, Jason discovers S-Corps. He files for late election relief backdated to January 1, 2025. The IRS approves it because:

• He has reasonable cause (didn't know about the requirement)
• He acted diligently when he discovered it
• He can file his 2025 taxes consistently with S-Corp treatment

What to do after your backdated election is approved

Once approved, you need to file proper tax returns:

For the backdated year:

1. File Form 1120-S (S-Corporation tax return) instead of Schedule C
2. Issue yourself a W-2 for your reasonable salary
3. Set up distributions for the remaining profit
4. Each shareholder files their personal return with Schedule K-1 showing their share

But wait... there's an alternative for the first year. Instead of retroactive payroll, you can issue a 1099-MISC as officer compensation for the backdated year. This is a one-time workaround that many CPAs use successfully. Need help? Book a call with a Keeper tax pro.

For current and future years:

Going forward, you need:

• Regular payroll with W-2s
• Quarterly payroll tax payments
• Annual S-Corp tax returns (Form 1120-S)
• Proper documentation of distributions

What happens if you missed the window of 3 years and 75 days?

If you've missed this window, you have one remaining option: request a Private Letter Ruling (PLR) from the IRS.

However, taxpayers requesting relief must pay a user fee of $43,700 (up from $38,000) for requests received after Feb. 1, 2025. This is expensive and time-consuming, making it practical only for businesses with substantial tax savings at stake.

For most small businesses, if you're beyond the 3-year window, it's better to simply elect S-Corp status going forward rather than trying to backdate.

State considerations

Don't forget about your state! While the federal election is crucial, some states have different deadlines or don't automatically recognize federal S-Corp elections. Make sure to:

• Research your state's S-Corp recognition rules
• File any required state-level forms
• Check if your state has separate deadlines
• Coordinate federal and state filings to avoid gaps

States like California, New York, and New Jersey have additional requirements and fees for S-Corps.

Be aware of these costs

Backdating an S-Corp election isn't just about the tax savings. There are costs involved:

Professional fees (typical ranges):

• Late S-Corp election preparation: $600-$1,200
• Setting up payroll systems: $550-$650
• Officer compensation via 1099 for backdated year: $650
• S-Corporation tax return (Form 1120-S): $1,500+

Total first-year costs: Approximately $3,000-$4,000

If you're looking for help, Keeper can help you with formation, tax planning, and filing for a fraction of the cost! Check out our free trial to see for yourself.

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Is backdating right for you?

Consider backdating your S-Corp election if:

• You earn at least $60,000+ in net business income
• You're within 3 years and 75 days of your intended effective date
• You can demonstrate reasonable cause for the delay
• You meet all S-Corp eligibility requirements
• The tax savings justify the administrative burden

Ready to backdate your S-Corp?

If you want to backdate your S-Corp election, it's time to get moving on these next steps!

1. Calculate your potential savings: Determine if the math makes sense for your income level
2. Gather evidence of intent: Collect emails, notes, or documentation showing you wanted S-Corp treatment
3. Verify your eligibility: Confirm you meet all S-Corp requirements
4. Download Form 2553 (if you want to do it yourself)
5. Consider working with a professional: While you can DIY this, working with a professional, like a Keeper tax pro, might be the prudent choice
6. Act quickly: The sooner you file after discovering the missed deadline, the stronger your "reasonable cause" argument