- March 4, 2022
S Corporation is a tax status offered by the IRS to a business. It generally serves as a pass-through entity for the corporation, that passes its income and its losses through its shareholders to gain income tax benefits. Form 1120-S is used by such S corporations to file their federal tax return with the IRS every year. This form is used to report the gains, deductions, income, and losses of the business during the current tax year.
Tax information that is reported in Form 1120-S
S corporation will enter three types of information on Form 1120-S, namely their income, their deductions, their taxes, and payment. The IRS expects the business to furnish the following information in Form 1120-S.
- The gross profits and receipts of the business
- Compensation offered to the officers in the form of Wages and Salaries
- Estimated tax payments
- Returns and allowances of the business
- Costs of the goods sold
- Refundable tax credits that are carried over from the past years.
Information required to file Form 1120
1120- S is used to file IT returns for an S corporation in the US and it is a five-page form that can be downloaded from the IRS website. The information required to complete the form and file it is as follows.
- General information about the business, including the date of incorporation of the entity and the date at which it has attained S Corp status.
- The employer identification number and the business activity code
- The balance sheet of the entity with a detailed profit and loss statement
- Information about the payments made to the independent contractors. If it is more than $600, then the business should have sent them Form 1099.
Page one of Form 1120-S has four divisions to report business information, income statement, deductions of the business, and its tax and payments. There are also six schedules attached with 1120-S and the first three schedules are mandatory to fill.
Schedule B – pertains to the accounting methods followed by the S Corp
Schedule D – the business reports its capital gains and losses in this section
Schedule K – brings the income, deductions, tax credits of the business together.
Schedule L – offers a glimpse of the assets, liabilities, and equities of the business.
Schedule M – helps to report the discrepancies in the profits or losses reported in the books and reported on the taxes.
Schedule M2- to report changes in the retained earnings of the company.
Filing Form 1120- S or 7004 Extension
The deadline to file Form the 1120S is March 15th of the tax year. Businesses can apply for a six-month extension by filing Form 7004. The Form can be filed either electronically or by mail. However, IRS recommends organizations with more than $10 million or more in total assets that file 250 or more returns during the tax year file their Form 1120 electronically.
Just like individuals report their taxes to the government every year, so should corporations. It is easy for corporations to e-file Form 1120-S extension through a credible service provider like Tax2efile within the deadline and avoids penalties from the IRS.
