Form 1120-S is the tax return S corporations use to report their income, losses, deductions, and credits to the IRS. Officially called the U.S. Income Tax Return for an S Corporation, it ensures businesses stay compliant while allowing shareholders to report their share of income properly.
Why file Form 1120-S?
If you run an S corporation, you’re required to file Form 1120-S. It keeps your business compliant, prevents penalties, and ensures accurate tax reporting. Filing on time also helps shareholders avoid tax surprises and keeps the company in good standing.
Who needs to File Form 1120-S?
Any business that has elected S corporation status must file this form. Unlike traditional corporations, S corps don’t pay federal income tax themselves. Instead, profits and losses pass through to shareholders, who report them on their personal tax returns.
To qualify as an S corporation, a business must:
- Be a domestic corporation
- Have 100 or fewer shareholders
- Issue only one class of stock
- Have eligible shareholders (individuals, certain trusts, and estates)
A company officer or tax professional can handle the filing, either electronically or by mail.
How to file Form 1120-S
You can file Form 1120-S yourself or work with a tax professional. Submit it electronically through the IRS e-file system or mail a printed copy to the appropriate IRS office.
To avoid issues, double-check all details, include any required schedules, and file on time. Mistakes can lead to IRS penalties, so accuracy matters.
Benefits of filing Form 1120-S
Beyond legal compliance, filing Form 1120-S has its advantages:
- Pass-through taxation: The corporation itself doesn’t pay federal taxes, which can lower the overall tax burden.
- Financial transparency: Shareholders get a clear view of the company’s financial health.
- Simplified tax payments: Filing makes it easier for shareholders to complete their personal tax returns.
- Investor appeal: Well-maintained tax records can help attract funding and investors.
There’s also the financial risk of skipping it. Late or incorrect filings can lead to fines of up to $450 per shareholder.
When is Form 1120-S due?
Form 1120-S is due on the 15th day of the third month after the end of the corporation’s tax year. If your business follows the calendar year, that means March 15.
If the deadline falls on a weekend or holiday, it moves to the next business day. Need more time? You can request an extension, but any taxes owed should still be estimated and paid by the original deadline.