Form 1120 C Corp: Everything You Need to Know
C corporations, or c corps, are considered separate entities to their owners (shareholders); therefore, owners do not include the corporation's income tax as part of their personal tax return.3 min read
2. When is the Deadline to File Form 1120?
3. Completing Form 1120
Basic information C corporations need to complete and file income tax Form 1120.
Paying Taxes as a C Corporation
C corporations, or c corps, are considered separate entities to their owners (shareholders); therefore, owners do not include the corporation's income tax as part of their personal tax return.
A c corp pays income tax by filing a tax return with the Internal Revenue Service (IRS) using Form 1120-U.S. Corporation Income Tax Return and paying the calculated taxes.
Corporate tax returns are a complicated and lengthy process, but most tax software programs have tax returns and will guide you through the process.
When is the Deadline to File Form 1120?
Form 1120 must be completed and filed no later than the 15th day of the 3rd month following the close of your corporate tax year. For example, if the close of your corporation's tax year is December 31, your completed form must be received by the IRS by March 15.
If that date falls on a weekend or public holiday, the deadline will be moved to the is following business day.
C corporations must file Form 1120 each year, whether or not they have taxable income for that period.
Completing Form 1120
Corporations can create basic tax returns using most tax software programs. The following section will help guide you through the information required on Form 1120. For more detailed instructions, please review the Instructions for Form 1120. U.S. Corporation Income Tax Return.
There are three basic areas that need to be completed. The preparer will be required to:
- Enter basic information about the c corp and the tax return.
- Enter various income, deductions, credits, and other information to determine the corporation's tax liability.
- Enter the Balance Sheet and, if applicable, reconcile any loses.
Section 1 – Basic Information
To complete this section, you will need your corporation's basic information, including, but not limited to:
- Incorporation Date.
- Total assets.
Section 2 – Information About Corporation Income
To complete this section, you will require information regarding your corporation's income by category, including:
- Gross receipts.
- Cost of goods sold.
- Dividends and Interests earned.
- Capital gains.
Section 3 – Deductions – Tax-Deductible Expenses
To complete Section 3, you will need access to the financial information for tax-deductible expenses, including, but not limited to:
- Compensation paid to officers.
- Taxes paid and/or licensing fees.
- Interest paid.
- Contributions to charity.
- Depreciation of property, including any rental properties.
Consult with your financial department as they will have access to all the information required. Please note, you do not need to submit proof of these expenditures; however, it is advised that you retain copies in the event of an audit.
Section 4 – Tax, Refundable Credits, and Payments
Your corporation's financial officers will have all the information required to complete this section of your tax return.
Note: Some information, for example, Balance Sheets, is mandatory, while other information will only need to be provided if it is listed on the tax return form. Pay close attention when completing your Corporate Income Tax Form 1120 as not all of the following Schedules may not be required as part of your corporation's tax return:
- Schedule A - Cost of Goods Sold. (NOTE: If your corporation provides a service and does not have any expenses relating to goods or products sold, you will not need to complete this schedule as part of your return).
- Schedule C – Dividends and Special Deductions. (NOTE: This Schedule C is different than the Schedule C sole proprietors are required to complete as part of their personal income tax return).
- Compensation of officers.
- Schedule J – Information on tax rate computation.
- Schedule K – Information regarding the method of accounting used by the corporation, business type, stock ownership, as well as shareholder information
- Schedule L – Balance Sheet Per Books for the tax year.
- Schedule M-1 – Reconciliation of Income (Loss) Per Books with Income (Loss) Per Return (it is likely that this calculation will have to be done by your tax preparer).
- Schedule M-2 – Analysis Unappropriated Retained Earning Per Books (another calculation your tax preparer will likely need to complete).
If you need help to complete your C corporation's Income Tax Return (Form 1120), you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.