What Form 1120 Is For

Form 1120 is the main tax return that C corporations use to report their financial activity to the Internal Revenue Service. Think of it as the corporate equivalent of the individual Form 1040, but for businesses structured as corporations.

Unless your corporation is exempt under section 501, all domestic corporations—including those in bankruptcy—must file Form 1120, regardless of whether they made a profit or loss during the year. The form serves several critical purposes: it reports your corporation's income, gains, losses, deductions, and credits, and it calculates how much income tax your business owes (or whether you're due a refund).

The form collects comprehensive information including gross receipts, cost of goods sold, operating expenses, officer compensation, depreciation, and various deductions. You'll also complete supporting schedules covering dividends, special deductions, tax computation, balance sheets, and a reconciliation between book income and tax income. IRS.gov

Important note: Form 1120 is specifically for C corporations. If your business is structured as an S corporation, limited liability company (treated as a partnership), real estate investment trust, or other specialized entity, you'll need a different form. For example, S corporations file Form 1120-S, partnerships file Form 1065, and tax-exempt organizations with business income file Form 990-T.

When You’d Use Form 1120 (Late Filing and Amended Returns)

Standard Filing Deadline

For the 2014 tax year, your Form 1120 is generally due by the 15th day of the third month after your corporation's tax year ends. For most calendar-year corporations (those whose fiscal year runs January 1 through December 31), this means your 2014 return was due on March 15, 2015. If this date falls on a weekend or federal holiday, you can file on the next business day. IRS.gov

For corporations using a fiscal year (any 12-month period ending on a date other than December 31), the same three-month rule applies from your year-end date. New corporations filing a short-period return (less than 12 months) must file by the 15th day of the third month after that short period ends.

Extensions

If you need more time, you can request an automatic six-month extension by filing Form 7004 by your original due date. This extension gives you extra time to file the paperwork, but it doesn't extend the time to pay any taxes owed—interest and penalties will accrue on unpaid balances even with an extension. IRS.gov

Late Filing

If you miss the deadline (including any extension), penalties kick in quickly. The IRS charges 5% of the unpaid tax for each month or partial month your return is late, up to a maximum of 25%. If your return is more than 60 days late, there's a minimum penalty equal to the smaller of your tax due or $135. The penalty can be waived only if you can demonstrate reasonable cause for the delay. Additionally, you'll face a separate late payment penalty of 0.5% per month on unpaid taxes (also capped at 25%), plus interest on both the unpaid tax and penalties. IRS.gov

Amended Returns

Made a mistake on your 2014 Form 1120? Use Form 1120X (Amended U.S. Corporation Income Tax Return) to correct it. You generally have three years from the date you filed your original return (or the due date, whichever is later) to file an amended return if you're claiming a refund. Common reasons for amending include discovering unreported income, finding missed deductions, correcting calculation errors, or receiving updated information from K-1 schedules. IRS.gov

Key Rules for 2014

Electronic Filing Requirements: Corporations with total assets of $10 million or more that file at least 250 returns annually were required to e-file Form 1120 in 2014. Smaller corporations could e-file voluntarily. The IRS accepts electronic filing of the main form, supporting schedules, extensions (Form 7004), and employment tax returns. IRS.gov

Estimated Tax Payments: If your corporation expected its total tax liability (minus credits) to be $500 or more, it was required to make quarterly estimated tax payments. These installments were due on the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. All estimated tax payments had to be made via electronic funds transfer using the Electronic Federal Tax Payment System (EFTPS) or through your bank. IRS.gov

New Tangible Property Regulations: Final regulations under sections 162(a) and 263(a) took effect for tax years beginning after 2013, clarifying when expenses for acquiring, producing, or improving tangible property must be capitalized versus deducted. This significantly impacted how corporations handled repairs, maintenance, and improvement costs in 2014. IRS.gov

Schedule M-3 Changes: For tax years ending December 31, 2014, and later, filers with less than $50 million in total assets who were required to file Schedule M-3 (reconciliation of financial statement income to tax return income) could choose to complete only Part I and use Schedule M-1 instead of Parts II and III. IRS.gov

Accounting Methods: Corporations (other than qualified personal service corporations) with average annual gross receipts exceeding $5 million were required to use the accrual method of accounting. Additionally, unless qualifying for an exception, corporations had to use the accrual method for sales and purchases of inventory. IRS.gov

Step-by-Step (High Level)

1. Gather Your Records: Collect all necessary documentation including financial statements (income statements and balance sheets), records of gross receipts and sales, business expense receipts, payroll records, asset depreciation schedules, prior year tax returns, and your Employer Identification Number (EIN).
2. Complete the Income Section (Lines 1-11): Report all sources of income including gross receipts from sales, returns and allowances, cost of goods sold, dividends, interest, rental income, royalties, capital gains, and other income. Your gross income is the total of all these sources.
3. Calculate Deductions (Lines 12-29): List all allowable business deductions such as compensation of officers, salaries and wages, repairs and maintenance, bad debts, rent, taxes and licenses, interest, charitable contributions, depreciation, advertising, pension plans, employee benefits, and other ordinary and necessary business expenses.
4. Figure Taxable Income and Tax (Lines 28-34): Subtract total deductions from total income to arrive at taxable income. Apply the appropriate corporate tax rates for 2014 (which ranged from 15% to 35% depending on income brackets). Subtract any credits, add alternative minimum tax if applicable, and calculate your final tax liability.
5. Complete Supporting Schedules: Fill out all required schedules including Schedule C (Dividends and Special Deductions), Schedule J (Tax Computation and Payment), Schedule K (Other Information), Schedule L (Balance Sheets), and Schedule M-1 (Reconciliation of Income per Books with Income per Return).
6. Apply Payments and Calculate Balance: Report all estimated tax payments made during the year, any overpayment from the prior year applied to 2014, and tax deposits. Determine whether you owe additional tax or are due a refund.
7. Sign and Attach Documentation: The return must be signed by an authorized corporate officer (president, vice president, treasurer, or chief accounting officer). Attach all supporting schedules in the proper order, ensuring each page includes your corporation's name and EIN.
8. File by the Deadline: Mail your return to the appropriate IRS service center based on your corporation's location and asset size, or submit electronically if eligible. Keep copies of everything for your records. IRS.gov

Common Mistakes and How to Avoid Them

Incomplete Entry Spaces

Never write "See Attached" or "Available Upon Request" in place of specific information. The IRS wants actual data entered on the form itself. If you need more space, attach additional sheets in the same format, but always include totals on the printed form. IRS.gov

Wrong Address

Use your corporation's actual principal business address, not your registered agent's address. For example, if you incorporated in Delaware but your main office is in Los Angeles, use the Los Angeles address. If your address changes after filing, notify the IRS using Form 8822-B. IRS.gov

Incorrect EIN

Double-check that you're using the correct Employer Identification Number. Using the wrong EIN causes processing delays and can result in penalties for failure to file.

Offsetting Income and Expenses

Don't combine related items that should be reported separately. For instance, report interest income on the income line and interest expense on the deduction line—never net them against each other. The IRS needs to see both amounts. IRS.gov

Math Errors

Calculation mistakes are common, especially when dealing with multiple schedules. Use tax preparation software or have a professional review your calculations. Simple addition errors can trigger IRS corrections and delayed refunds.

Missing Signatures

An unsigned return is considered invalid. Make sure an authorized officer signs and dates the return. If a receiver, trustee, or assignee signs on behalf of the corporation, attach documentation proving their authority. IRS.gov

Improper Attachment Order

Arrange supporting documents in the order specified in the instructions (Schedule N, Schedule D, Schedule O, Form 4626, etc.). Put your corporation's name and EIN on every attachment. IRS.gov

Poor Recordkeeping

Maintain organized records for at least three years from your filing date (or due date, whichever is later). Keep records of property basis for as long as you own the asset plus three years after disposition. Save copies of all filed returns—they're invaluable for preparing future returns and calculating earnings and profits. IRS.gov

Missing Estimated Tax Payments

If your corporation owes $500 or more in tax, quarterly estimated payments are required. Missing these payments triggers underpayment penalties calculated from each due date. Use Form 1120-W to calculate your required installments.

What Happens After You File

Processing Timeline

The IRS processes corporate returns and issues refunds more slowly than individual returns. If you're owed a refund, expect to wait several weeks to several months. You can request direct deposit by filing Form 8050 with your return to speed up refund delivery. For corporations that overpaid estimated taxes significantly, you could file Form 4466 (Corporation Application for Quick Refund of Overpayment) to get money back faster, but this must be filed before submitting Form 1120. IRS.gov

Automated Review

The IRS computer systems automatically check returns for mathematical accuracy and compare reported information against third-party documents (W-2s, 1099s, etc.). If they find a discrepancy, you'll receive a notice explaining the issue and any adjustment to your tax liability.

Payment Due

If you owe additional tax, it must be paid by the original due date (the 15th day of the third month after year-end) to avoid penalties and interest. You can pay electronically through EFTPS, by credit card, or by check. Even if you filed an extension, interest accrues from the original due date on any unpaid balance.

Examination (Audit) Possibility

The IRS may select your return for examination. Corporate returns face audit rates higher than individual returns, particularly for larger corporations and those in certain industries. An audit doesn't necessarily mean you did anything wrong—many are random selections or based on statistical anomalies. If selected, you'll receive a notice explaining what information the IRS needs.

Statute of Limitations

Generally, the IRS has three years from the date you filed (or the due date, whichever is later) to assess additional tax. This period extends to six years if you substantially understated income (more than 25% of gross income), and there's no time limit if you never filed or filed a fraudulent return.

Collection Actions

If you owe tax and don't pay, the IRS can take collection actions including filing a Notice of Federal Tax Lien (public notice that the government has a legal claim to your property) or issuing a levy (seizing assets such as bank accounts or accounts receivable).

FAQs

Q1: Does my corporation need to file Form 1120 if we had no income or activity during 2014?

Yes. Unless your corporation is tax-exempt under section 501, you must file Form 1120 even with zero income or activity. The IRS requires all domestic corporations to file annual returns regardless of profitability. Simply enter zeros in the income and expense sections and check the appropriate boxes. Not filing can result in penalties and jeopardize your corporate status. IRS.gov

Q2: Can I file Form 1120 myself, or do I need an accountant?

While you're legally allowed to prepare and file your own corporate return, Form 1120 is significantly more complex than individual returns. If your corporation has straightforward income and expenses, and you're comfortable with tax concepts, you might handle it yourself using tax software. However, most corporations benefit from professional help, especially for their first filing or if they have complex transactions like depreciation, inventory, multiple business activities, or significant assets. IRS.gov

Q3: What's the difference between Form 1120 and Form 1120-S?

Form 1120 is for C corporations, which pay corporate income tax on their profits. Form 1120-S is for S corporations, which are pass-through entities that don't pay corporate tax—instead, income and losses flow through to shareholders who report them on their personal returns. Whether you file Form 1120 or 1120-S depends on your corporation's election status with the IRS. You cannot choose year to year; you must file Form 2553 to elect S corporation status, and once approved, you file Form 1120-S until you revoke that election. IRS.gov

Q4: How long should I keep records related to my 2014 Form 1120?

Keep all records supporting income, deductions, and credits for at least three years from the filing date or due date (whichever is later). However, keep records related to property (showing your basis in assets) for as long as you own the property plus three years after you sell or dispose of it. If you claimed a loss from worthless securities or bad debt deduction, keep records for seven years. Keep copies of all filed tax returns indefinitely—they're useful for preparing future returns, responding to IRS inquiries, and calculating earnings and profits for dividend purposes. IRS.gov

Q5: Can I get an extension beyond the six-month automatic extension?

The six-month extension granted by Form 7004 is the only extension generally available for Form 1120. Extensions beyond this period are rarely granted and only in extraordinary circumstances beyond your control (such as natural disasters, serious illness, or overseas military deployment). Even then, you must request additional time before the extended deadline expires and demonstrate compelling reasons. Remember that extensions are for filing the return only—you still must pay estimated taxes by the original deadline to avoid penalties. IRS.gov

Q6: What if I discover an error after filing my 2014 Form 1120?

File Form 1120X (Amended U.S. Corporation Income Tax Return) as soon as you discover a mistake. Include an explanation of what you're changing and why. If the error results in additional tax owed, pay it with the amended return to minimize interest charges. If you're due a refund, you generally have three years from the original filing date to claim it. Don't file an amended return for math errors—the IRS will correct those automatically. Do amend if you discover unreported income, missed deductions, or need to correct filing status or accounting methods. IRS.gov

Q7: What happens if I can't pay the full tax amount shown on my Form 1120?

File your return on time even if you can't pay in full—this avoids the failure-to-file penalty, which is much steeper than the failure-to-pay penalty. Pay as much as you can with the return to reduce interest and penalties. The IRS offers installment payment agreements for corporations that need time to pay. You may be able to apply online or by filing Form 9465. Interest and late-payment penalties continue accruing on unpaid balances, but an approved payment plan can help you avoid more serious collection actions like liens and levies. IRS.gov

Sources: All information in this guide comes from official IRS publications including the 2014 Instructions for Form 1120, Form 1120 itself, and IRS.gov resources. For the most current information and any updates, visit www.irs.gov/form1120.

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