The tax advantages of electing S-corp status make it an attractive option for many businesses. It’s relatively easy to make the election, but filing the S-corp tax return is another thing entirely.
Even though S-corps are pass-through entities, they must file a business tax return. The S-corp tax form is Form 1120S, U.S. Income Tax Return for an S Corporation.
In this guide, we’ll walk you through helpful pointers for completing the S-corp tax return.
Not sure how to get started with your S-corp tax filing? The tax professionals at Gordon Law can help. We can prepare your business tax returns, as well as your personal tax return, so you can sit back and enjoy the tax savings the S-corp status offers.
What is Form 1120S?
Form 1120S is the tax form where S-corps report their tax activity for the year. It is a separate tax filing from the individual Form 1040. S-corp shareholders must file both forms for the tax year.
Some information reported on the S-corp tax filing includes:
- Basic information about the entity
- Shareholder information
- Gross income
- Expenses
- Assets
- Liabilities
- Shareholder’s equity
Unlike Form 1120 for C corporations, no tax liability is calculated on Form 1120S. Instead, the relevant information for each shareholder is reported on Schedule K-1. The individual shareholders use Schedule K-1 to report their share of the income and expenses on their tax return.
Who Must File Form 1120S?
All S-corps must file Form 1120S. Your business is an S-corp if:
- The entity filed Form 2553, Election by a Small Business Corporation, and
- The IRS accepted the election
The entity will continue to file the S-corp tax return while the election remains in effect.
When Is Form 1120S Due?
The due date for Form 1120S is the 15th day of the third month following the end of the entity’s tax year. Generally, this is March 15th since most S-corps are calendar-year corporations.
The late filing penalty for Form 1120S is $220 per shareholder, per month (or part of a month). These penalties add up fast, so be sure to file on time! Our team at Gordon Law can help ensure you never miss a tax deadline again.
What Should You Do If You Can’t Complete S-Corp Tax Filing by March 15th?
If March 15th is too soon for you to file Form 1120S for your S-corp, you can request an extension for more time to file your taxes. It’s very common for S-corps to file for extensions, so don’t worry too much about it. You just need to ensure you file for the extension before the due date.
To request a filing extension for your S-corp, simply complete Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns.
The extension will give your S-corp another 6 months to file Form 1120S, so the extended due date is typically September 15th.
S-Corp Tax Filing: How to Complete Form 1120S
If you’ve never filed Form 1120S before, you may be surprised by the amount of information about your S-corp that you must disclose to the IRS. It’s different from your individual tax return, so it can be tricky for first-time filers.
The IRS website is the best place to start before filling out the S-corp tax return. The IRS posts S-corp tax filing instructions for each year’s Form 1120S. The S-corp tax return instructions include line-by-line instructions that guide you through the form.
Before you start filling it out, though, you’ll want to make sure you have some of this information handy:
- EIN
- Incorporation document
- Income statement
- Balance sheet
If you start filling out Form 1120S and find it too difficult to handle, that’s okay. It’s common for S-corps to seek help from experienced tax professionals to prepare their S-corp tax returns. A tax professional can help ensure you are properly reporting all the required information and that it’s always done on time.
Additional S-Corp Tax Forms
In addition to filing an S-corp tax return, the entity must send Schedule K-1 to each shareholder.
Each shareholder must use the information from their K-1 form to report their share of income and expenses on Schedule E of Form 1040 (the individual tax return).
State Taxes for S-Corps
As with most tax filings, you need to remember the state tax filings for your S-corp, too.
Most states follow the federal tax treatment of S-corp, but some do not. This should be a consideration before you make the S-corp election.
You may have state tax filing obligations in multiple states, not just the state where you live or where your business is registered. If there are more shareholders, the S-corp may need to file in the states where those other shareholders live, too. If your S-corp does business in another state, you may need to file there, as well.
The more states your S-corp needs to report to, the more complicated your individual tax return may be. If you receive multiple Schedule K-1s for different states, you may need to file nonresident tax returns for those states.
This is another area where a tax professional can come in handy. They can ensure you file in every state you need to and claim tax credits on your resident state tax return so you aren’t overpaying tax to any state.
Additional Resources for S-Corp Tax Filing
- Self-Employed Tax Guide
- Understanding Pass-Through Taxation
- How to Make Estimated Quarterly Tax Payments
Need Help Filing Form 1120S?
Enlisting the assistance of a tax professional for your S-corp tax filing can save your business time, money, and energy. After everything you already do for your business, the last thing you want to do is deal with the IRS because of a mistake on your S-corp tax return.
Gordon Law has experience helping S-corps like yours stay compliant with the IRS. Give us a call today and simplify your tax filing!
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