Form 1120S is required annually of every S corporation (S-corp). The return includes a combination of financial information and questions the IRS will use to determine potential tax liabilities. We’ll cover how to enter the financial information and do an in-depth dive into the questions required on Schedule B. If you’re ready to fill out the form, you can download Form 1120S from the IRS and fill it out by hand.
Each item included under “Other income (loss)” and “Other deductions” must be stated separately, identifying the nature and amount of each item. The S corporation should also use Statement A to report each shareholder’s pro rata share of QBI items, W-2 wages, UBIA of what is the depreciation tax shield qualified property, qualified PTP items, and section 199A dividends reported to the S corporation by another entity. Don’t include these contributions in the amounts reported in box 12 of Schedule K-1 because shareholders must separately determine if they qualify for the 50% or 100% AGI limitation for these contributions. The contribution must be subject to a restriction that the property remain available for such production. For example, if the corporation has more than one rental activity reported in box 3, identify the amount from each activity.
This allows the federal government to correctly tax each business according to its industry and collect valuable economic data. Once you’ve entered your income and deductions, the next step is to calculate the total taxable income (or loss). It must be filed with the IRS by the 15th of the third month following the end of the corporation’s tax year. So if a company’s tax year runs from Jan. 1 to Dec. 31, the company’s tax return is due on March 15. On the other hand, a company whose tax year runs between July 1 and June 30 must complete and file Form 1120-S by Sept. 15. An S corporation is a business entity permitted under the U.S. tax code.
If the corporation uses a third party to make deposits on its behalf, they may have different cutoff times. File the corporation’s return at the applicable IRS address listed below. For details about the election, see Form 2553, Election by a Small Business Corporation, and the Instructions for Form 2553. The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. TAS strives to ensure that every taxpayer is treated fairly and knows and understands their rights under the Taxpayer Bill of Rights.
Is electronic filing an option for IRS Form 1120S?
Once the principal business activity is determined, enter the six-digit code from the list below on page 1, item B. Also enter the business activity on page 2, Schedule B, line 2(a) and a brief description of the principal product or service of the business on line 2(b). You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law.
Filing Requirements for Form 1120S
- Before you can find the right principal business code for your business, you’ll need to fully understand your business’ main revenue-generating activity.
- On the dotted line to the left of the entry space for line 13e, identify the type of credit.
- Do not take conflicting positions on corporate and personal tax returns.
Tax return preparers must be careful to know who the shareholders are, so that Schedules K-1, Shareholder’s Share of Income, Deductions, Credits, recourse loans vs non etc., can be prepared correctly. But preparers also need to identify all of the officers, including any who may consider their ownership interest in the company to be an interest in a passive activity under Sec. 469 (the passive activity loss rules). In the event that you are engaged in more than one professional activity, you may need to list multiple business codes when filing taxes.
Trusts and Estates as Shareholders
Any income or gain reported on lines 1 through 10 of Schedule K that qualifies as inversion gain, if the corporation is an expatriated entity or is a partner in an expatriated entity. Attach a statement to Form 1120-S that shows the amount of each type of income or gain included in the inversion what is fixed asset management gain. The corporation must report each shareholder’s pro rata share of the inversion gain in box 17 of Schedule K-1 using code AP. Attach a statement to Schedule K-1 that shows the shareholder’s pro rata share of the amount of each type of income or gain included in the inversion gain. Enter on line 13d any other credit (other than credits reported on lines 13a through 13c) related to rental real estate activities.
You have the option to file either electronically or by mail. If you’re running short on time, be sure to file for an extension to avoid penalties. If you need assistance with complex financial calculations, doola’s team of tax experts is here to do the heavy lifting for you, ensuring both accuracy and compliance. If you haven’t secured an EIN or need assistance with forming your business, doola can simplify the process, ensuring you have everything lined up to get started effortlessly. The IRS uses the ownership percentage detailed in Form 1120-S to allocate how much profit and loss is assigned to an individual shareholder.
