What is Form 1120-S: S Corporation U.S. Income Tax Return?
Form 1120-S, the U.S. Income Tax Return for a S Corporation, reports income, profits, losses, credits, deductions, and other information for S firms to the IRS. Simply put, Form 1120-S is an S corporation’s tax return. The form is due by the 15th of the third month after the corporation’s tax year.
Who must file IRS Form 1120-S?
Form 1120-S is required if a corporation files Form 2553: Election by a Small Business Corporation and the IRS accepts it.
A S corporation is a business entity allowed under the U.S. tax code. It’s for firms with fewer than 100 shareholders. S companies, as pass-through businesses, do not pay corporate taxes. They instead charge shareholders for taxes.
The IRS assigns profit and loss to shareholders based on their Form 1120-S ownership percentage.
Calculating profit and loss is simple if a shareholder’s shareholding doesn’t vary over the year. Should shareholders acquire, sell, or transfer shares or interests throughout the year, their profit and loss will be prorated per share.
For federal tax purposes, an S company passes corporate income, losses, deductions, and credits to shareholders. It avoids double taxation by taxing shareholders, not the corporation.
Form 1120-S Contents
S firms use Form 1120-S to report annual income, profits, losses, credits, deductions, and other information to the IRS.
The form covers company information like:
- Name of company
- Mailing address
- Employer ID
- Company incorporation date
- Total assets
- S company election effective date
- Activity code: business
The table below lists other important form information.
| Sections on Form 1120-S: U.S. Income Tax Return for an S Corporation | |
| Section | What’s Included |
| Income | Receipts, sales, returns, allowances, gross profit, other income, etc. |
| Deductions | Compensation, salaries, wages, repairs, bad debts, rents, taxes, depreciation, advertising, pensions, etc. |
| Tax and Payments | Excess net passive income, estimated tax penalty, etc. |
Form 1120-S has several schedules. This includes:
- Schedule B: Additional Info
- Schedule K: Shareholder Pro Rata Items
- Schedule L: Books Balance Sheet
- Schedule M-1: Reconciliation of Book and Return Income (Loss)
- Schedule M-2: Accumulated Adjustments Account, Shareholders’ Undistributed Taxable Income Previously Taxed, Earnings and Profits, and Other Adjustments
Schedule K-1 must accompany Form 1120-S. This schedule is required for all shareholders.7Schedule K-1 lists each S company shareholder and their income, earnings, losses, credits, and deductions. Each shareholder’s tax return includes Schedule K-1 data.
How Do I Fill Out Form 1120-S?
Online Form 1120-S can be filed annually. Special tax software allows small business owners to fill out these forms independently. Most of these programs cost money, although they may be cheaper than professional help.
Some S businesses, particularly those with complex tax problems, may hire a tax preparer or accountant to handle their annual tax returns. Forms completed and submitted by a tax expert decrease or eliminate errors.
The IRS still accepts paper returns by mail, although it advocates filing electronically. Mailing paper returns can delay them.
Download all Form 1120-S pages from the IRS website.
What is the purpose of Form 1120-S?
Form 1120-S is the S company tax return. S companies submit their revenue, earnings, losses, tax credits, deductions, and other information to the IRS using it. Schedule K-1 must accompany the form when mailed or electronically submitted. This schedule lists S company stockholders’ income, profit, loss, tax credits, and deductions.
Who Submits a U.S. Income Tax Return for an S Corporation 1120-S?
S companies file 1120-S. The IRS must approve an S corporation election by a firm with less than 100 shareholders before filing the paperwork. The paperwork must be filed electronically or by mail by a corporate member or tax expert.
When is Form 1120-S due for the U.S. income tax return for an S corporation?
Form 1120-S is S companies’ yearly tax return. The IRS must receive it by the 15th of the third month after the corporation’s tax year. If a company’s tax year is January 1–December 31, its return is due March 15. However, a firm with a July 1–June 30 tax year must submit Form 1120-S by September 15.
Bottom Line
Every entity must file an IRS tax return annually to reflect its tax responsibilities—individuals and enterprises of all sizes. The S corporation return is Form 1120-S. These companies have less than 100 owners and distribute profits and losses. Companies must submit Schedule K-1 with their electronic or mail-in returns. The IRS must receive all papers by the 15th of the third month after the corporation’s tax year.
Conclusion
- Form 1120-S is the yearly tax return for S companies.
- S companies record income, profits, losses, credits, deductions, and more on the form.
- Form 1120-S must include Schedule K-1, which details stockholders and their profit and loss shares.
- On Form 1120-S, the corporation must report its income, deductions, taxes, and payments.
- File Form 1120-S online or by mail.
