S Corporation Tax Return: Everything You Need to Know
The IRS requires the corporation to submit certain tax forms, but there is no direct income tax for the corporation. 3 min read
2. Deadlines for Quarterly Income Tax Returns
3. Late-Filing Penalties
4. Tax Forms for S Corporations
An S corporation tax return is a necessity even though the corporation has tax liabilities due to its pass-through status that puts the burden of paying taxes on shareholders owners instead. The IRS requires the corporation to submit certain tax forms, but there is no direct income tax for the corporation.
Income Tax Return Deadline for an S-Corp
All S corporations have to file their yearly return by day 15 of the third month after the beginning of the new year. This date is usually March 15, but it can be moved back if the 15th falls on a weekend or holiday. The corporation has the responsibility to report all activity of a financial nature on Form 1120S, and each shareholder has to submit a Schedule K-1. Shareholders report their portion of the taxable income from the business on their personal income tax filings. In the event the S corporation can't submit its tax return by March 15th, it can file for an extension.
Shareholders who are paying personal income tax on their share of the corporate income are not granted an exception on the due date for their personal taxes. In most cases, the date is April 15 of every year unless an extension is requested.
Deadlines for Quarterly Income Tax Returns
In the event the S corporation has employee income, it must withhold federal income taxes and FICA taxes from its employees' wages. The S corporation has a mandate to report those amounts on an IRS Form 941 every quarter it pays employees. Form 941 reports the total amount it withheld from payroll and is being remitted to the IRS. A form is due each calendar quarter. Those dates are:
- January 31
- April 30
- July 31
- October 31
Another reporting requirement that comes with paying employees is the mandate to file the Federal Unemployment Tax Return (FUTA), known as Form 940, on an annual basis. If the S-corp, in a single quarter, pays out earnings of at least $1,500 or has a minimum of a single employee working part-time in 20 weeks or more, the corporation must file Form 940. This form is for reporting unemployment taxes owed by the corporation. And the corporation has to send this form to the IRS as it is a mandatory reporting requirement. The due date for this form is January 31. In the event the corporation remits all of its tax in a timely manner, the IRS grants a grace period for filing until February 10 with no penalties.
When a corporation doesn't file the Form 1120S when it's due or by the extended date, a minimum penalty of $260 for each month the return is late may be applied by the IRS. The penalty is multiplied by each Schedule K-1 that has not been filed. In the event that the request to correctly report information is willingly disregarded, the penalty is increased to $530.
In the event the corporation files Form 941 after the due date and there's an unpaid tax balance, penalties and interested may be assessed on the balance for each month the tax return is late. There is a maximum penalty of 25 percent. There are similar penalties for filing Form 940 past the deadline.
Tax Forms for S Corporations
As previously mentioned, S corporations file their federal income tax returns on Form 1120s. An additional informational form, called the Schedule K-1, is filed for each individual shareholder. Required information on the Schedule K-1 includes the shareholder's share of deductions, income, credits, and miscellaneous. Form 1120s requires 11 items. They are:
- Selection effective date.
- Business activity code.
- Number of shareholders.
- Employer Identification Number.
- Date incorporated.
- Indicate if this is the first year filing as an S-corp.
- Profit and loss statement.
- Balance sheet report.
- Accounting method.
- 1099 reporting.
Because S corporations use individual tax returns for reporting income, they have to take a calendar year end date to sync with the personal tax year's end. The corporate tax return can be filed by mail or e-filed, and a tax preparer or accountant can file the return on behalf of the corporation.
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