Form 1120-S

Form 1120-S is an IRS tax form used by S corporations to report income, deductions, gains, losses, and tax credits. Unlike regular corporations (C corps), S corporations don’t pay federal income tax directly. Instead, income “passes through” to shareholders, who report it on their individual tax returns.

Key Facts

• Used by S Corporations Only: Filed annually by S corporations (small corporations with a special tax status).
• Pass-Through Taxation: Profits and losses are passed through to shareholders’ personal tax returns (no corporate-level tax).
• Includes Schedule K-1: Each shareholder receives a Schedule K-1, showing their portion of the company’s income and expenses.
• Due Date: Typically due by March 15 (or 2.5 months after the end of the corporation's tax year).
• What It Reports:
  
  • Gross receipts or sales
  • Cost of goods sold (COGS)
  • Deductions (for example, salaries, rent, advertising)
  • Ordinary business income/loss
  • Taxes and payments made
  • Shareholder information
• Must File Separately from Personal Tax Return: Even though the corporation itself doesn’t pay income tax, it must still file Form 1120-S as an informational return.

1. Who must file Form 1120-S?

Any business that has elected S corporation status with the IRS (via Form 2553) and meets the requirements must file 1120-S annually.

2. What is a Schedule K-1?

Schedule K-1 is a form issued to each S corp shareholder, detailing their share of the corporation’s income, deductions, and credits. Shareholders use it to file their own taxes.

3. Is the S corp taxed on its income?

No. The corporation itself doesn’t pay federal income tax on its earnings - shareholders do.

4. What happens if an S corporation files late?

Late filing may result in penalties, often $210 per shareholder per month (as of 2024), for up to 12 months.

5. Can an LLC file Form 1120-S?

Yes - if the LLC elects to be treated as an S corporation by filing both Form 8832 (entity classification) and Form 2553 (S corp election) with the IRS.