The IRS 1120-S form is a tax document required for S corporations to report their annual income, deductions, gains, losses, and other financial activities to the United States Internal Revenue Service. This crucial form helps clarify the company's financial status, ensuring that it meets its tax obligations accurately and efficiently. For those ready to tackle their S corporation's taxes, start by clicking the button below to fill out the form.
Navigating the complexities of tax filing can feel daunting for S corporation owners, yet understanding the 1120-S form is a critical component of ensuring your business meets its tax obligations while leveraging potential benefits. This particular form serves as the tax return for S corporations, entities electing to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Unlike traditional C corporations, which are subject to double taxation at both the corporate and shareholder levels, S corporations benefit from a pass-through taxation structure, significantly impacting how income is reported and taxed. Completing the 1120-S accurately is vital not only for compliance with the Internal Revenue Service (IRS) regulations but also for optimizing the financial health of the business. The form requires detailed financial information, including income, losses, deductions, and shareholder equity changes over the fiscal year, emphasizing the need for meticulous record-keeping and an understanding of tax laws relevant to S corporations. As such, the 1120-S form embodies a crucial bridge between the business's operational results and its tax responsibilities, making its comprehension and correct application paramount for business owners and tax professionals alike.
Form 1120-S
U.S. Income Tax Return for an S Corporation
OMB No. 1545-0123
▶ Do not file this form unless the corporation has filed or
2021
Department of the Treasury
is attaching Form 2553 to elect to be an S corporation.
Internal Revenue Service
▶ Go to www.irs.gov/Form1120S for instructions and the latest information.
For calendar year 2021 or tax year beginning
, 2021, ending
, 20
A S election effective date
Name
D Employer identification number
TYPE
B
Business activity code
Number, street, and room or suite no. If a P.O. box, see instructions.
E Date incorporated
OR
number (see instructions)
PRINT
City or town, state or province, country, and ZIP or foreign postal code
F Total assets (see instructions)
C Check if Sch. M-3 attached
$
G Is the corporation electing to be an S corporation beginning with this tax year? See instructions.
Yes
No
H
Check if: (1) Final return
(2) Name change (3) Address change
(4) Amended return (5)
S election termination
I
Enter the number of shareholders who were shareholders during any part of the tax year
. . . ▶
J
Check if corporation: (1)
Aggregated activities for section 465 at-risk purposes
(2) Grouped activities for section 469 passive activity purposes
Caution: Include only trade or business income and expenses on lines 1a through 21. See the instructions for more information.
Tax and Payments Deductions (see instructions for limitations) Income
1a
Gross receipts or sales
b
Returns and allowances
1b
c
Balance. Subtract line 1b from line 1a
. . . . . . . .
1c
2
Cost of goods sold (attach Form 1125-A)
3
Gross profit. Subtract line 2 from line 1c
4
Net gain (loss) from Form 4797, line 17 (attach Form 4797)
5
Other income (loss) (see instructions—attach statement)
6
Total income (loss). Add lines 3 through 5
. . . .
.
. .
▶
7
Compensation of officers (see instructions—attach Form 1125-E) . . .
8
Salaries and wages (less employment credits)
9
Repairs and maintenance
10
Bad debts
11
Rents
12
Taxes and licenses
13
Interest (see instructions)
14
Depreciation not claimed on Form 1125-A or elsewhere on return (attach Form 4562)
15
Depletion (Do not deduct oil and gas depletion.)
16
Advertising
17
Pension, profit-sharing, etc., plans
18
Employee benefit programs
19
Other deductions (attach statement)
20
Total deductions. Add lines 7 through 19
21
Ordinary business income (loss). Subtract line 20 from line 6 . . . .
22a
Excess net passive income or LIFO recapture tax (see instructions) . . .
Tax from Schedule D (Form 1120-S)
22b
Add lines 22a and 22b (see instructions for additional taxes)
22c
23a
2021 estimated tax payments and 2020 overpayment credited to 2021 .
Tax deposited with Form 7004
23b
Credit for federal tax paid on fuels (attach Form 4136)
23c
d
Add lines 23a through 23c
23d
24
Estimated tax penalty (see instructions). Check if Form 2220 is attached .
. ▶
25
Amount owed. If line 23d is smaller than the total of lines 22c and 24, enter amount owed . . .
26
Overpayment. If line 23d is larger than the total of lines 22c and 24, enter amount overpaid . . .
27
Enter amount from line 26: Credited to 2022 estimated tax ▶
Refunded ▶
Sign Here
Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
▲
May the IRS discuss this return
with the preparer shown below?
Signature of officer
Date
Title
See instructions.
Paid
Print/Type preparer’s name
Preparer’s signature
Check
if
PTIN
Preparer
self-employed
Firm’s name ▶
Firm’s EIN ▶
Use Only
Firm’s address ▶
Phone no.
For Paperwork Reduction Act Notice, see separate instructions.
Cat. No. 11510H
Form 1120-S (2021)
Page 2
Schedule B
Other Information (see instructions)
1 Check accounting method: a
Cash
Accrual
c Other (specify) ▶
2 See the instructions and enter the:
a Business activity ▶
b Product or service ▶
3At any time during the tax year, was any shareholder of the corporation a disregarded entity, a trust, an estate, or a nominee or similar person? If “Yes,” attach Schedule B-1, Information on Certain Shareholders of an S Corporation . .
4At the end of the tax year, did the corporation:
aOwn directly 20% or more, or own, directly or indirectly, 50% or more of the total stock issued and outstanding of any foreign or domestic corporation? For rules of constructive ownership, see instructions. If “Yes,” complete (i) through (v)
below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yes No
(i)Name of Corporation
(ii)Employer Identification
Number (if any)
(iii)Country of Incorporation
(iv)Percentage of Stock Owned
(v)If Percentage in (iv) Is 100%, Enter the Date (if applicable) a Qualified Subchapter
S Subsidiary Election Was Made
bOwn directly an interest of 20% or more, or own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital in any foreign or domestic partnership (including an entity treated as a partnership) or in the beneficial interest of a trust? For rules of constructive ownership, see instructions. If “Yes,” complete (i) through (v) below . . . . . . .
(i)Name of Entity
(iii)Type of Entity
(iv)Country of Organization
(v)Maximum Percentage Owned in Profit, Loss, or Capital
5a At the end of the tax year, did the corporation have any outstanding shares of restricted stock? . . . . . . . .
If “Yes,” complete lines (i) and (ii) below.
(i)
Total shares of restricted stock
(ii)
Total shares of non-restricted stock
bAt the end of the tax year, did the corporation have any outstanding stock options, warrants, or similar instruments? . If “Yes,” complete lines (i) and (ii) below.
Total shares of stock outstanding at the end of the tax year
(ii)Total shares of stock outstanding if all instruments were executed ▶
6Has this corporation filed, or is it required to file, Form 8918, Material Advisor Disclosure Statement, to provide
information on any reportable transaction?
. . . . . . . . . . . . . . . . . . . . . . . .
Check this box if the corporation issued publicly offered debt instruments with original issue discount . . . . ▶
If checked, the corporation may have to file Form 8281, Information Return for Publicly Offered Original Issue Discount
Instruments.
8If the corporation (a) was a C corporation before it elected to be an S corporation or the corporation acquired an asset with a basis determined by reference to the basis of the asset (or the basis of any other property) in the hands of a C corporation, and
(b) has net unrealized built-in gain in excess of the net recognized built-in gain from prior years, enter the net unrealized built-in
gain reduced by net recognized built-in gain from prior years. See instructions . . . . . . ▶ $
9Did the corporation have an election under section 163(j) for any real property trade or business or any farming business
in effect during the tax year? See instructions . . . . . . . . . . . . . . . . . . . . . . . .
10 Does the corporation satisfy one or more of the following? See instructions . . . . . . . . . . . . . .
aThe corporation owns a pass-through entity with current, or prior year carryover, excess business interest expense.
bThe corporation’s aggregate average annual gross receipts (determined under section 448(c)) for the 3 tax years preceding the current tax year are more than $26 million and the corporation has business interest expense.
cThe corporation is a tax shelter and the corporation has business interest expense.
If “Yes,” complete and attach Form 8990.
11 Does the corporation satisfy both of the following conditions? . . . . . . . . . . . . . . . . . .
aThe corporation’s total receipts (see instructions) for the tax year were less than $250,000.
bThe corporation’s total assets at the end of the tax year were less than $250,000. If “Yes,” the corporation is not required to complete Schedules L and M-1.
Page 3
Other Information (see instructions) (continued)
12During the tax year, did the corporation have any non-shareholder debt that was canceled, was forgiven, or had the
terms modified so as to reduce the principal amount of the debt? . . . . . . . . . . . . . . . . .
If “Yes,” enter the amount of principal reduction . . . . . . . . . . . . . . ▶ $
13During the tax year, was a qualified subchapter S subsidiary election terminated or revoked? If “Yes,” see instructions .
14a Did the corporation make any payments in 2021 that would require it to file Form(s) 1099?
If “Yes,” did the corporation file or will it file required Form(s) 1099?
Is the corporation attaching Form 8996 to certify as a Qualified Opportunity Fund?
If “Yes,” enter the amount from Form 8996, line 15
. . . . ▶ $
Schedule K
Shareholders’ Pro Rata Share Items
Total amount
1
Ordinary business income (loss) (page 1, line 21)
. . . . . .
Net rental real estate income (loss) (attach Form 8825)
3a
Other gross rental income (loss)
Expenses from other rental activities (attach statement)
3b
Other net rental income (loss). Subtract line 3b from line 3a . . .
3c
(Loss)
Interest income
Dividends: a Ordinary dividends
5a
Income
b Qualified dividends
5b
Royalties
Net short-term capital gain (loss) (attach Schedule D (Form 1120-S))
8a
Net long-term capital gain (loss) (attach Schedule D (Form 1120-S)) .
Collectibles (28%) gain (loss)
8b
Unrecaptured section 1250 gain (attach statement)
8c
Net section 1231 gain (loss) (attach Form 4797)
Other income (loss) (see instructions) . . .
Type ▶
Deductions
Section 179 deduction (attach Form 4562)
12a
Charitable contributions
Investment interest expense
12b
Section 59(e)(2) expenditures
12c
Other deductions (see instructions) . . . .
12d
13a
Low-income housing credit (section 42(j)(5))
Low-income housing credit (other)
13b
Credits
Qualified rehabilitation expenditures (rental real estate) (attach Form 3468, if applicable)
13c
Other rental real estate credits (see instructions)
13d
e
Other rental credits (see instructions) . . .
13e
f
Biofuel producer credit (attach Form 6478)
13f
g
Other credits (see instructions)
13g
International Transactions
Attach Schedule K-2 (Form 1120-S), Shareholders’ Pro Rata Share Items—International, and
check this box to indicate you are reporting items of international tax relevance . . .
Alternative MinimumTax Items(AMT)
15a
Post-1986 depreciation adjustment
Adjusted gain or loss
15b
Depletion (other than oil and gas)
15c
Oil, gas, and geothermal properties—gross income
15d
Oil, gas, and geothermal properties—deductions
15e
Other AMT items (attach statement)
15f
ItemsAffecting ShareholderBasis
16a
Tax-exempt interest income
Foreign taxes paid or accrued
16f
Other tax-exempt income
16b
Nondeductible expenses
16c
Distributions (attach statement if required) (see instructions) . . .
16d
Repayment of loans from shareholders
16e
Page 4
Shareholders’ Pro Rata Share Items (continued)
Information
17a
Investment income
Other
Other items and amounts (attach statement)
Investment expenses
17b
Dividend distributions paid from accumulated earnings and profits
17c
Recon-
ciliation
Income (loss) reconciliation. Combine the amounts on lines 1 through 10 in the far right
column. From the result, subtract the sum of the amounts on lines 11 through 12d and 16f .
Schedule L
Balance Sheets per Books
Beginning of tax year
End of tax year
Assets
(a)
(b)
(c)
(d)
2a
Trade notes and accounts receivable . . .
Less allowance for bad debts
(
)
Inventories
U.S. government obligations
Tax-exempt securities (see instructions) . .
Other current assets (attach statement) . . .
Loans to shareholders
Mortgage and real estate loans
Other investments (attach statement) . . .
10a
Buildings and other depreciable assets . . .
Less accumulated depreciation
11a
Depletable assets
Less accumulated depletion
Land (net of any amortization)
Intangible assets (amortizable only) . . . .
Less accumulated amortization
Other assets (attach statement)
Total assets
Liabilities and Shareholders’ Equity
Accounts payable
Mortgages, notes, bonds payable in less than 1 year
Other current liabilities (attach statement) . .
Loans from shareholders
Mortgages, notes, bonds payable in 1 year or more
Other liabilities (attach statement) . . . .
22
Capital stock
23
Additional paid-in capital
Retained earnings
Adjustments to shareholders’ equity (attach statement)
Less cost of treasury stock
Total liabilities and shareholders’ equity . .
Page 5
Schedule M-1
Reconciliation of Income (Loss) per Books With Income (Loss) per Return
Note: The corporation may be required to file Schedule M-3. See instructions.
Net income (loss) per books . . . .
Income recorded on books this year
Income included on Schedule K, lines 1, 2,
not included on Schedule K, lines 1
through 10 (itemize):
3c, 4, 5a, 6, 7, 8a, 9, and 10, not recorded
on books this year (itemize)
a
Tax-exempt interest $
Expenses recorded on books this year
Deductions included on Schedule K,
lines 1 through 12 and 16f, not charged
through 12 and 16f (itemize):
against book income this year (itemize):
Depreciation $
Travel and entertainment $
Add lines 5 and 6
8 Income (loss) (Schedule K, line 18).
Add lines 1 through 3
Subtract line 7 from line 4 . . . .
Schedule M-2
Analysis of Accumulated Adjustments Account, Shareholders’ Undistributed Taxable Income
Previously Taxed, Accumulated Earnings and Profits, and Other Adjustments Account
(see instructions)
(a) Accumulated
(b) Shareholders’
(c) Accumulated
(d) Other adjustments
adjustments account
undistributed taxable
earnings and profits
account
income previously taxed
Balance at beginning of tax year
Ordinary income from page 1, line 21 . . .
Other additions
Loss from page 1, line 21
Other reductions
Combine lines 1 through 5
Distributions
Balance at end of tax year. Subtract line 7 from
line 6
Filling out the IRS Form 1120-S is an essential step for S corporations in the United States, ensuring compliance with tax obligations by accurately reporting income, deductions, and credits. This form allows the S corporation to pass income directly to shareholders, avoiding the double taxation typical of C corporations. The following steps are designed to guide you through each part of the IRS Form 1120-S, from basic company information to financial details, ensuring a thorough and compliant submission.
Once completed, reviewing the form for accuracy and completeness is crucial before submission. This ensures compliance with IRS regulations and helps avoid potential audits or penalties. Filing can be done electronically or by mail, depending on your preference and the specific requirements of the IRS for the tax year in question.
The IRS 1120-S form is a tax document required for S corporations to submit their annual tax return. It reports the corporation's income, losses, deductions, and credits to the Internal Revenue Service (IRS). The form ensures that the profits and losses of the business are passed through to the shareholders and reported on their individual tax returns.
Any corporation that has elected to be treated as an S corporation by filing IRS Form 2553 and has received IRS approval must file the 1120-S form. This requirement holds even if the corporation had no income, losses, deductions, or credits for the year.
The deadline for filing the IRS 1120-S form is the 15th day of the 3rd month following the end of the corporation's tax year. For most S corporations, operating on a calendar-year basis, the deadline is March 15. If the deadline falls on a weekend or legal holiday, the due date is extended to the next business day. S corporations can request a six-month extension to file using Form 7004.
The IRS 1120-S form requires detailed information, including but not limited to:
S corporations have the option to file the IRS 1120-S form either electronically through the IRS e-file system or by mailing a paper form to the appropriate address, depending on the state in which the corporation is located. Filing electronically is faster, more secure, and ensures the form is processed more quickly. However, some corporations may prefer or need to file a paper form due to specific circumstances.
Filling out the IRS 1120-S form, a requirement for S corporations to report their income, gains, losses, deductions, credits, etc., can seem daunting. However, being aware of common mistakes can make the process smoother and help avoid potential audit triggers. Let's unpack some of these errors to keep in mind:
Incorrect or Missing Information: One of the most frequent mistakes is simply entering information that is incorrect or overlooking required fields. Every detail, from the Employer Identification Number (EIN) to the company’s address, should be double-checked for accuracy.
Miscalculating Income and Deductions: It's crucial to carefully calculate both income and deductions. Errors in these areas can lead to misreported earnings and potentially result in penalties.
Failure to Report All Income: All income, including that from other sources besides the primary business operations, must be reported. Missing out on some income streams can lead to discrepancies and attract unwanted attention from the IRS.
Not Properly Classifying Deductions and Credits: Various expenses can qualify as deductions or credits, but they must be properly classified according to IRS rules. Misclassification can affect the owed tax amount and increase audit risk.
Mismatching Information with Schedule K-1: The information reported on the 1120-S form must match what is reported on the Schedule K-1 forms issued to shareholders. Inconsistencies here can be a red flag for auditors.
Ignoring State Filing Requirements: While the focus is often on federal taxes, many states have specific filing requirements for S corporations. Not adhering to these can lead to problems at the state level, including fines and penalties.
When filling out the IRS 1120-S, attention to detail is key. Avoiding these common pitfalls not only helps ensure compliance but also contributes to a smoother tax season. If ever in doubt, it's wise to consult with a tax professional.
When preparing the IRS 1120-S form, which is specific to S corporations for reporting their annual income, deductions, gains, losses, etc., it's imperative to have a comprehensive understanding of various other forms and documents often used in conjunction. These documents are crucial for accurately completing the 1120-S and ensuring compliance with tax obligations. Below is a selection of these important forms and documents, each playing a vital role in the tax filing process.
Each document listed plays a key role in the tax preparation process for an S corporation. By ensuring that all relevant forms and documents are accurately completed and filed, S corporations can maintain compliance with IRS requirements. This list serves as a foundational tool for navigating the complexities of corporate tax filing.
The IRS 1120-S form is a tax document used by S corporations for annual tax returns. It shares similarities with several other tax forms, each serving different entities or purposes but structured to capture financial information in relation to tax liabilities. Here are eight documents similar to the IRS 1120-S form:
IRS Form 1120: This is the U.S. Corporation Income Tax Return used by C corporations. Like the 1120-S form, it requires detailed financial information, including income, losses, deductions, and credits. The main difference lies in the tax treatment and eligibility criteria of S corporations versus C corporations.
IRS Form 1065: Used by partnerships for reporting their income, gains, losses, deductions, and credits. Although it serves a different type of business entity, this form's structure and requirement for detailed financial reporting are similar to the 1120-S.
IRS Form 1040 Schedule C: Sole proprietors and single-member LLCs use Schedule C to report profits or losses from a business. This form resembles the 1120-S in that it details the financial activity of a business entity, albeit on a different scale and for a different tax structure.
IRS Form 1041: This form is used by estates and trusts to report income, deductions, gains, losses, etc. Like the 1120-S, it is specialized for a specific entity type but similarly requires a detailed accounting of taxable activities.
IRS Form 990: Used by nonprofit organizations, Form 990 details income, expenditures, and operational information. While its purpose is for tax-exempt entities, its comprehensive financial reporting mirrors the detail found in the 1120-S form.
IRS Form 5472: Required for reporting transactions between a 25% foreign-owned U.S. corporation or a foreign corporation engaged in U.S. business and a related party. The level of detail regarding transactions and financial information is similar to that of the 1120-S form, aiming at transparency and fair tax assessment.
IRS Form 8865: This form is for U.S persons and entities to report interests in foreign partnerships. Like the 1120-S, Form 8865 requires detailed financial information to assess tax obligations under U.S. law, despite focusing on international partnerships.
IRS Form 2553: Although not a tax return form, Form 2553 is filed by corporations electing to be treated as an S corporation. It's related to the 1120-S in that it is a prerequisite for using this form. It signifies the desire of a corporation to switch its tax status, similar to how the 1120-S is used to report taxes under that specific status.
These forms work together within the IRS's framework to ensure entities of all types report their financial activities accurately for tax assessment purposes. Despite their targeted entity types and distinct purposes, their shared feature is the demand for detailed financial accounting, reflecting each entity's economic activities over the fiscal year.
Filling out the IRS 1120-S form, which is essential for S corporations, requires careful attention to detail and understanding of specific tax regulations. To assist individuals and business owners with this important task, here are 10 critical dos and don'ts to consider:
Adhering to these dos and don'ts can simplify the process of completing the IRS 1120-S form and help ensure that your S corporation remains in good standing with the IRS. Always consider consulting with a tax professional for advice tailored to your specific situation.
Discussing the IRS 1120-S form often brings up several misconceptions. This form, used by S corporations for tax purposes, can seem daunting at first glance. Let's clear up some common misunderstandings:
Only big companies need to file it: There's a belief that the 1120-S form is just for large businesses. However, any corporation that has elected to be treated as an S corporation with the IRS, regardless of its size, needs to file this form.
It's the same as the 1120 form: Although related, the 1120 and 1120-S serve different purposes. The 1120 form is for C corporations, not S corporations. They have different tax implications and requirements.
Filing it means paying more taxes: The assumption that filing form 1120-S will automatically lead to higher taxes is incorrect. Since income from an S corporation is passed through to shareholders and reported on their individual returns, the tax situation may actually be more advantageous depending on the circumstances.
It's only about reporting income: While reporting income is a significant part of it, the 1120-S form also includes information on deductions, credits, and other financial activities. It's a comprehensive overview of the corporation's financial health, not just a profit report.
You can file it whenever you want: This is not true. Like many tax forms, the 1120-S has a specific deadline (March 15 for most S corporations). Filing late can result in penalties, so it's important to be aware of the deadline.
Understanding the facts about the 1120-S form can make tax season a bit less stressful for S corporation owners and shareholders. It's always a good idea to consult directly with a tax professional if you're unsure about your filing obligations or if you have specific questions related to your situation.
The IRS 1120-S form is a critical document for S corporations, a designation that allows corporations to pass income directly to shareholders and avoid double taxation. Understanding its purpose, requirements, and the process to correctly fill it out can significantly impact tax responsibility and compliance. Here are key takeaways regarding the IRS 1120-S form:
Completing the IRS 1120-S form accurately is essential for compliance and for taking advantage of the benefits that come with S corporation status. It is not only a requirement but a tool for financial transparency and planning. Seeking guidance from tax professionals or utilizing IRS resources can be beneficial in navigating this process.
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