One of the essential activities for doing business is filing taxes. For S corporations, Form 1120-S is part and parcel. Syed Professional Services will guide you through the complications of filling out this Form and filing all your tax requirements properly and promptly. Below is an overview of Form 1120 S, its instructions, and its importance concerning IRS reporting.
What Is a Form 1120-S
Form 1120 S is the U.S. Income Tax Return for an S Corporation. S corporations file this Form with the IRS for their income, losses, dividends, and other returns. For federal tax purposes, income, losses, deductions, and credits typically pass through to the shareholders of an S corporation. This means the corporation does not pay income tax; the shareholders do, representing income and losses in their tax returns.
Why Fill Form 1120-S
S corporations need to file Form 1120-S to report their financial activities to the IRS in the proper Form. The Form explains the condition of the company’s finances while achieving compliance with tax laws. Properly filing Forms avoids penalties and guarantees appropriate taxation of shareholders on their share of corporate income.
Form 1120-S General Instructions
Filling Form 1120-S may get challenging due to its complexity. It is straightforward when there is clear guidance. The following are the guidelines on these essential parts of filling out this Form:
- This section includes the corporation’s name, address, Employer Identification Number (EIN), and incorporation date. It must be accurate to avoid processing delays.
- Income: Indicate the company’s revenue, gross receipts or sales, cost of goods sold, and gross profits. Indicate other income sources: interest, dividends, and rental income.
- Deductions: This part encompasses all business expenses, including salaries, wages, repairs, interest, and deductions, which are accurately reported. A proper report in this section aids in determining the corporation’s taxable income.
- Taxes and Payments: S corps typically have no income tax, but it is not uncommon to have one. They also have the potential for other types of taxes, including, but not limited to, built-in gains tax and excess net passive income tax. “It is the place where all of these taxes are reported.”
- Schedule K and K-1: Schedule K is where the corporation identifies and summarizes its income, deductions, credits, and other items that will be passed to the shareholders. From Schedule K, a shareholder will receive a Schedule K-1 reporting the shareholder’s percentage of these items. It helps the shareholders show their income according to this schedule on their tax returns.
- An authorized officer of the corporation must complete and date the Form. Unsigned forms are incomplete, and that can land one a penalty.
Most Common Mistakes to Avoid
When filing Form 1120 S, do NOT make errors that many make; they can cause processing delays or penalties. Some of these common errors include:
- Incorrect EIN: Verify the Employer Identification Number.
- Incomplete Information: All fields should have all relevant information filled in.
- Mistakes in Incomes and Deductions: Make sure that the income and deduction entries are meticulously completed.
- No Signatures: Ensure that an authorized officer signs and dates the Form.
IRS Form 1120-S: Deadlines and Extensions
Form 1120-S is due by March 15th for a calendar-year corporation. However, if the return is due on a Saturday, Sunday, or legal holiday, it should be filed on the next business day. Suppose an S corporation requires more time than the period above for filing. In that case, you can obtain an automatic six-month extension using Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns.
Syed Professional Services: The Best Help You Can Find to File Your Taxes
It may be very complex to file Form 1120 S, but Syed Professional Services will make that easy for you. Our team has extensive experience in preparing and filing S corporation taxes. We ensure that the Form is well-prepared and submitted on time. We professionally and personally serve you in the most tailored way to meet your needs, fully comply with the tax rules, and optimize your tax strategy.
Conclusion
Form 1120-S is essential for S corporations, as it will adequately report income and losses, among other tax statements, to the IRS. Mistakes can be avoided by thoroughly understanding the importance of the prescribed forms and ensuring proper compliance with tax laws. Syed Professional Services leads the way for expert guidance, enabling businesses to walk through this process quickly and confidently. Contact Syed Professional Services now to learn more about the support we can give you for your Form 1120 S preparation.
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