MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

Do Your Retroactive S-Election Before Q3 Payroll

21 Feb 2026 · 1 min

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Mark Kohler explains how to file a retroactive S-election (Form 2553) for clients who exceed the $50,000 shareholder-distribution threshold mid-year. Use Rev. Proc. 2013-30 to bypass the 75-day deadline, start payroll in Q3 or Q4, then file Form 941, W-2s, Form 1120S, and Schedule K-1 by year-end. The IRS typically approves it.

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If I have a client come in in the middle of the year and I can already see they're over that 50,000 threshold and the profit's coming down the barrel, I'm going to say let's make a retroactive s election to January 1st of that year that's okay and I'm going to start payroll in third and fourth quarter wrap up the year with the 941, the W2 1120s and K1. They're going to be fine. I can make that retroactive s election time during the year back to January 1st and not have any problem whatsoever. Now some accountants will worry about the 75 day rule where if I don't make my s selection by March 15 then I the window for the year. That's why when you file your 2553 you're going to include unreference rev rule 2013-30 so when you put that in the request for the retroactive s election it's always granted. Now I should say sometimes you'll get a letter back from there ask what and then you send it again you're granted.