C corporations use shape 1120 to file their business taxes. Follow these six steps to properly accomplished and charge form 1120 by the ascribable date ( which can differ from business to business ). Choosing your business type is one of the first and most authoritative decisions you ’ ll make as a little business owner. Your business type determines not only what legal and fiscal protective covering you get, but besides how you file little occupation taxes. If your business is taxed as a C corporation, mannequin 1120 is the return you must use.
Overview: What is Form 1120?
Businesses taxed as C corporations file their business tax return with IRS Form 1120. Think of form 1120 as the C pot equivalent to personal tax shape 1040. Unlike other business structures, companies taxed as C corporations pay a flatcar 21 % corporate tax rate on taxable income. taxable income is the dispute between a C corporation ’ s income and its business tax deductions, losses, and credits. If your business international relations and security network ’ deoxythymidine monophosphate taxed as a C corporation, it ’ s considered a pass-through entity. pass-through entities, such as sole proprietorships and partnerships, pay no entity-level tax and legislate on their income tax indebtedness to their owners. There ’ s no flat tax rate for other types of business income : Your tax rate is bracketed based on your income level. Most pass-through entity types besides file information returns to detail business earnings to the IRS, but it ’ s not for taxpaying purposes .
Who has to file Form 1120?
Any organization taxed as a C corporation must file shape 1120. If you registered your business as a C pot or limited liability company ( LLC ), you might have to submit Form 1120. By default, LLCs are taxed like sole proprietorships or partnerships, depending on the number of owners. If they waive pass-through tax and elect C corporation tax income with Form 8832, they ’ re required to file Form 1120. If they meet IRS requirements, businesses registered as C Corporations can elect S corporation tax status by filing form 2553. S corporations, a pass-through entity type, file data return Form 1120-S. You have to file Form 1120 if your business is a ( n ) :
- C corporation that doesn’t elect S corporation taxation
- LLC that elects C corporation taxation
What you need to file Form 1120
Follow our little commercial enterprise tax preparation checklist before filling out business tax form 1120. Have the follow information :
- Your employer identification number (EIN)
- Last year’s Form 1120 return
- The date you incorporated
- Tax credit forms you’re planning to file this year
- A list of business deductions with supporting documents
- Accurate year-end account balances, which you can get from your accounting software
How to file tax Form 1120 for your small business
1. Build your tax team
Start the file procedure by gathering your tax team, which should include a corporate tax professional and corporate tax filing software. Owners of C corporations — called shareholders — aren ’ t considered freelance, so they can ’ deoxythymidine monophosphate use self-employment tax software. many coarse tax software companies, like TurboTax, have software options for C corporations. form 1120 is infamously long-winded, thus engage a tax professional to help you complete Form 1120. You may be tempted to file Form 1120 by yourself for a little, uncomplicated C pot. Just make sure you ’ ve identified a bodied tax adept who ’ s cook to answer questions and take over if needed .
2. Fill out most of page 1
Called the confront of Form 1120, the beginning page gives the IRS a glance at your company ’ sulfur tax position. You can fill out much of this using information stored in your accounting software. You ’ ll have blanks for cost of goods sold, disparagement, gains and losses, tax credits, and all full lines .
3. Fill out the required schedules
You ‘ll need to fill out these schedules when filing tax form 1120.
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C corporations, good like people, can buy stocks in different companies. C corporations report their annual dividend income from investments in other companies on 1120 Schedule C. Through the dividends received discount, C corporations can write off a share of dividend income. The deduction calculation depends on the sum of another pot your pot owns .
here ’ s where you calculate your C pot ’ s tax liability. The section picks up on the tax calculation you started on the first gear page of Form 1120, which lists your deductions. You go to Schedule J to enter business tax credits and estimated tax payments to arrive at your tax indebtedness. Line 2, “ income tax, ” is where you multiply your taxable income — page 1, argumentation 30 — by the 21 % federal bodied tax rate. Of course, the calculation international relations and security network ’ t always thus bare, so you and your tax professional should check the shape 1120 instructions for exceptions and further details. tax credits are dollar-for-dollar reductions to your tax indebtedness and are among the most effective ways to reduce your tax bill .
Schedule K asks for more information about the C corporation ’ s owners and holdings in early companies. Before that, you must enter your ship’s company ’ second accounting footing, cash or accumulation. Simple C corporations don ’ t have much to fill out on Schedule K. If your occupation has a post in another pot, it ’ s best to engage a tax master to help you here .
Schedule L is your company ’ randomness proportion sail per your books. Open the balance sail as of year-end in your account software to fill out this section .
Schedules M-1 and M-2
The IRS calculates some expenses, like disparagement, differently from how generally Accepted Accounting Principles ( GAAP ) require for non-tax fiscal report. Schedules M-1 and M-2 explain to the IRS some differences between your fiscal statements for book and tax purposes. Schedule M-1 and M-2 are complex, so call on your tax master to walk you through the action .
4. Look for other required schedules
Depending on your clientele activities, you might have to attach extra forms or schedules to Form 1120. Some coarse attachments include : A corporate tax professional should be knowledgeable of other forms you ’ re required to submit with Form 1120 .
5. Return to page 1
once you ’ ve finished filling out the pillow of Form 1120 and required attachments, you ’ re quick to finish the first page. Return to the face of your tax return to fill in any blanks .
6. Review and file your return
You ’ re done ! After reviewing your return with your preparer, e-file form 1120 using your tax software or have your tax preparer do it on your behalf .
When is Form 1120 due?
A C pot tax shape due date depends on its fiscal class. Some C corporations use a calendar class, while others start their year in July or October. normally, C corporations must file their form 1120 by the fifteenth day of the one-fourth month after the conclusion of its tax year — but not during a wax moon ( kidding about that final share ! ). A calendar year taxpaying C corporation files its form 1120 by April 15.
There is an exception for C corporations with June 30 year-ends : They must file by September 15, merely three months after their fiscal year-ends .
Incorporate a tax prep team in your corporate tax return
corporate tax income international relations and security network ’ t for the faint of heart, so name indisputable you ’ re not filing your corporate commercial enterprise taxes without steering. A professional tax preparer can besides reduce your corporation ’ s tax liability with tax credits and deductions you wouldn ’ metric ton otherwise have taken .