S Corp Taxes Due: Everything You Need to Know
Figuring out when are S corp taxes due can be challenging as IRS laws continue to change and different forms are due at various times of the year. 3 min read
2. S Corporation Tax Profile
3. Employment Taxes
4. Making Payments
5. Quarterly Filings
6. Starting or Stopping Business Mid-Year
7. Tax Laws Changes
Figuring out when are S corp taxes due can be challenging as IRS laws continue to change and different forms are due at various times of the year.
What is an S Corporation?
S corporations are corporations that have less than 100 shareholders and pass income and losses through to those shareholders. S corporations have to make a formal election with the IRS to be treated as an S corporation.
S Corporation Tax Profile
Although S corporations don't pay taxes, they still are required to file Form 1120S. Schedule K-1 is also an important document as it goes out to each shareholder and reports on the income, deductions, credits, and losses that each person is responsible for including on their own tax returns.
Form 1120S must be filed no later than mid-month of the third month following the end of the S corporation's tax year. For example, an S corporation that uses December 31st as the end of its tax year would need to complete Form 1120S by March 15th. If the due date falls on a weekend or recognized holiday, the due date shifts to the next weekday.
Despite not paying federal taxes, some states might require S corporations to pay state taxes.
Form 941 is used by S corporations to report employment taxes. It reports everything to do with employment, like quarterly wages, income tax withholdings, tips, Medicare and Social Security, and COBRA credits. Form 941 is due every three months.
FUTA, or Federal Unemployment Taxes, are itemized on Form 941. These taxes become due when FUTA payments are more than $500 in a calendar quarter.
The IRS requests that all tax payments be made through the Electric Federal Tax Payment System. Also called the EFTPS, this service has no fees. S corporations can also elect to send payments using a wire transfer from the bank. An alternative method would be to have a payroll service or tax professional make the payments, but there is a fee associated with these services.
If you can't make your tax payment on time, requesting a deadline extension is the best thing to do, as you have extra time to get your documents and have a CPA submit your taxes. It's better to request a deadline and ensure everything submitted is correct rather than rush and make a mistake. You might otherwise wind up with interest and penalties on missed taxes.
S corporations need to file Form 7004 to request a six-month extension. Just remember that an extension doesn't automatically mean what you owe is deferred. This is why it's important to talk to a tax professional and pay any tax liabilities on time.
Taxpayers are required to pay both federal and state taxes throughout the year. Employees who file W-2s have these taxes taken out, but businesses who are doing well need to pay their estimated quarterly taxes throughout the year before filing their official return. This applies to self-employed individuals as well.
You need to look at filing these by the 15th day of the fourth, sixth, ninth, and twelfth months. If you wait until the end of the year, you might have to pay penalties and interest.
Starting or Stopping Business Mid-Year
Did you start or stop your business at some point in the last year? While you can't deduct most costs incurred before you started the business, you may have the option to deduct them by capitalizing them. Whether you stopped or started a business partway through the year, you'll only file taxes for the time the business was active.
Tax Laws Changes
In 2017, the government changed the rules so the individual returns are due April 15, and requesting an extension gives you until October 15. While there is not an official word on due dates for other forms, they are typically tied with the IRS filing. One example is Form 5471, which is the Return of U.S. Persons with Respect to Certain Foreign Corporations, which would likely to be changed to match the new filing date.
C corporations benefit from the new April and October dates. Previously, they needed to file extensions because they were waiting on audited financial statements which don't typically arrive until the end of March. In the coming years, expect the IRS to continue changing the regulations and due dates.
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