What Is Form 1120-S: U.S. Income Tax Return for an S Corporation?

KEY TAKEAWAYS

• Each S Corporation’s earnings, losses, and dividends are disclosed on Form 1120-S.
• As long as the S corporation is still in existence, the form acts as the corporation’s yearly income tax return.
• In order to prevent double taxation on the corporation and its owners, corporations with few shareholders employ the S corporation classification.

What Is Form 1120-S?

Form 1120-S: U.S. Income Tax Return for an S Corporation is a tax form that S Corporations use to report their earnings, losses, and dividends to the IRS. Form 1120-S is essentially the tax return for an S corporation.

Who Needs to File IRS Form 1120-S?

If a corporation filed Form 2553 to elect to be an S corporation, and the Internal Revenue Service (IRS) recognized the election, the corporation is required to file Form 1120-S.

The IRS determines how much profit and loss should be allocated to each shareholder based on the ownership percentage specified in Form 1120-S.

When to File Form 1120-S

Corporations have until the fifteenth day of the third month following the end of their tax year to file their taxable income return, including Form 1120-S.

No matter how brief a corporation’s first tax year was, it must file by the fifteenth day of the third month after it ends. For example, if a corporation’s fiscal year ends on June 30, they are required to file by the fifteenth day of the third month following that year’s conclusion.

Dates that are due but fall on a Saturday, Sunday, or a legal holiday is postponed to the next business day.

How to File Form 1120-S

Most people choose to e-file their 1120-S Form through the IRS’ e-filing system. Many tax preparation softwares also allows you to file your Form 1120-S using their online systems.

If you prefer to film your form by mail, you can get Form 1120-S from the IRS website and mail a hard copy instead.

What Is the Difference Between Form 1120 and 1120S?

S Corporations must submit Form 1120-S for federal taxes, whereas C Corporations must file Form 1120. Both S Corps and C Corps are types of companies, but they differ in a number of ways and have significant benefits and drawbacks for business owners.

Unlike S Corps, C Corporations are not pass-through organizations. C Corps are required to complete Form 1120, submit it to the IRS, and pay corporate-level federal income tax.
A C Corporation’s shareholders are liable to pay personal income tax on both their salary from the company and any dividends they receive.

Summary

The tax return form for companies that are registered as S Corporations, a type of corporation that prevents double taxation at both the corporate and individual levels, is called Form 1120-S.

For S corporations, Form 1120-S is crucial because, in addition to disclosing corporate income, it also informs the IRS about the proportion of the business that is held by individual shareholders. 

Businesses will receive this advantage if this information is appropriately reported to the IRS.

Written by Sandra Habiger, CPA

Sandra Habiger is a Chartered Professional Accountant with a Bachelor’s Degree in Business Administration from the University of Washington. Sandra’s areas of focus include advising real estate agents, brokers, and investors. She supports small businesses in growing to their first six figures and beyond. Alongside her accounting practice, Sandra is a Money and Life Coach for women in business.

Written by Sandra Habiger, CPA

Sandra Habiger is a Chartered Professional Accountant with a Bachelor’s Degree in Business Administration from the University of Washington. Sandra’s areas of focus include advising real estate agents, brokers, and investors. She supports small businesses in growing to their first six figures and beyond. Alongside her accounting practice, Sandra is a Money and Life Coach for women in business.