There is no shortage of government forms business owners need to be familiar with in order to remain compliant with federal taxation and business regulations. With few exceptions, corporations in the United States must file Form 1120: US Corporation Income Tax Return even if they don’t have any taxable income. What you may not know is that there are different formats of Form 1120, each specifically designed for different types of corporations. These include Form 1120C for cooperative associations, 1120F for foreign corporations, and 1120H for condominium management. But today, we will explain Form 1120S and which type of business needs to complete it.
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A corporation files Form 1120S if it elected to be an S corporation (which is done by filing Form 2553). The form is used to report income, gains, losses, deductions, credits, and other information for the given tax year covered by an organization’s election to be an S Corporation.
Completing Form 1120S requires the business to provide a long list of information to the government. Categorically speaking, you must report corporate information, income, deductions, tax and payments, an officer’s signature, and other information attached to Schedule B. Let’s go into a little more detail:
Good file organization will help when it comes to filling out your tax forms.
Corporate Information
If you’re an S Corp filing your income taxes, you obviously need to supply basic information like the company’s name, address, employer identification number, and for which tax year you’re filing for. In addition to this, though, you must also provide your selection effective date, the date of incorporation, your business activity code, and your total assets. You will also indicate if the tax year represents your first year filing as an S Corp (in which case, you will attach Form 2553), if there has been any relevant changes to the business (e.g. a name or address change), and the number of shareholders throughout the year.
Income
Form 1120S also requires you to provide income information such as gross receipts or sales, returns and allowances, balance, cost of goods sold (attach for 1125-A to do so), gross profit, net gains or losses, other income or losses, and total income or loss.
Deductions
If your business qualifies for deductions or other tax breaks, this is where you get to report them. Report compensation of officers, salaries and wages, repairs and maintenance, rents, and interests paid. Also report bad debts, depletion, and any depreciation not claimed on Form 1125-A. Have an employee benefit program? Be sure to report it here.
Tax and Payments
It is no business owner’s favorite thing, but we all must pay our taxes, right? On Form 1120S, you will report excess net passive income or LIFO recapture tax, tax deposited with Form 7044, credit for federal tax paid on fuels (Form 4136), and an estimated tax penalty from Form 2220. You can also state the amount owed, any overpayment, the amount credited to next year’s returns, and the amount refunded.
Now, like other tax forms, S Corporations are allowed to outsource Form 1120S preparation to certified tax preparers. If you chose this option, the preparer should provide their name, that of their firm, their signature, the date, the firm’s Employer Identification Number, address, and phone number.
