What IRS Form 1120 (2018) Is For
IRS Form 1120 (2018) is the U.S. Corporation Income Tax Return that C corporations use to report income, deductions, tax credits, and capital gains to the Internal Revenue Service. Corporations typically file this form to calculate their federal taxable income and determine the amount of corporate income tax owed. The form applies to all income taxes for tax years beginning in 2018.
C corporations, including resident corporations and certain foreign corporations doing business in the United States, must file Form 1120 unless they qualify for another return under the Internal Revenue Code. The Tax Cuts and Jobs Act (TCJA) introduced a single 21 percent corporate tax rate, replacing prior corporate income tax rates under the previous law.
When You’d Use Form 1120 for 2018 (Late or Amended Filing)
Corporations file IRS Form 1120 (2018) late or amended when they receive an Internal Revenue Service notice for an unfiled return, discover unreported business income, or need to adjust their tax items. A late filing may also occur when revising financial statement income or correcting previous tax errors.
Refund claims must generally be filed within three years of the original due date or two years of payment. For calendar-year filers, that three-year period expired April 15, 2022. Filing remains necessary to update net operating loss carryforwards and correct future tax years, even if refunds are no longer available.
Key Rules Specific to 2018
- Flat Corporate Tax Rate: The Tax Cuts and Jobs Act introduced a 21 percent flat corporate tax rate. Corporations should apply this rate for tax years beginning in 2018.
- AMT Repeal: The corporate alternative minimum tax was repealed, simplifying the corporate tax system and aligning with new federal income tax rules.
- New Provisions: The Jobs Act introduced requirements for reporting qualified business income, foreign dividends, and excess business loss limitations. Corporations had to follow new rules for GILTI, FDII, and the dividends-received deduction.
- Net Operating Loss Rules: Net operating loss deductions can no longer be carried back but can be carried forward indefinitely. These losses are limited to 80 percent of taxable income in future years.
- Repealed Deduction: The domestic production activities deduction was eliminated, affecting charitable contributions and certain payments, including alimony paid.
- Interest Limitation: Section 163(j) limits business interest deductions based on adjusted gross income and average annual gross receipts.
Browse more tax form instructions and filing guides in our Forms Hub.
Step-by-Step (High Level)
- Gather IRS Transcripts: Request account transcripts from the Internal Revenue Service to verify prior payments, income earned, and non-business deductions.
- Use the Correct Form: Always use the 2018 version of IRS Form 1120 and follow that year’s instructions to comply with the tax code.
- Attach Required Schedules: Include Schedules L, M-1, and M-2 unless the small corporation exception applies. Add Schedule D for capital gains, Schedule N for foreign corporations, and others as needed.
- Apply the Correct Tax Law: Use Form 8992 for GILTI, Form 8993 for FDII, and Form 8990 for interest limitations. Apply special rules for trade or business income and business property.
- Calculate Penalties: Compute underpayment penalties using Form 2220. If estimated taxes were not deposited through EFTPS, additional penalties and interest may apply.
- File and Maintain Records: Submit the return electronically if possible or mail it to the correct Treasury Department service center. Keep all returns, tax benefits documentation, and supporting financial records for at least three years.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
- Using Outdated Tax Rates: Corporations must apply the 21 percent corporate tax rate, not the prior graduated rates.
- NOL Errors: 2018 net operating losses must be carried forward indefinitely and can only offset 80 percent of future federal taxable income.
- Omitted Schedules: Do not forget Schedule M-1 or M-2. Both can affect reconciliation between book and tax income.
- Wrong Deadlines: Note that fiscal-year filers, such as those ending June 30, had a due date of September 15, 2019.
- Missing Forms: Corporations should not overlook Form 8992, 8993, or 8990, which are essential for reporting international income and business interest deductions.
- Improper Deposits: Tax payments must be made using EFTPS. Failure to deposit correctly increases tax liability and interest owed.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
The Internal Revenue Service usually processes 2018 corporate returns within six to eight weeks. Amended returns may take longer. After processing, corporations receive confirmation notices indicating acceptance, the balance due, or requests for additional information.
If income taxes are unpaid, interest and penalties will continue to accrue until the taxes are paid in full. Corporations may request installment agreements using Form 9465. Filing ensures that net operating loss deductions, tax credits, and future-year adjustments are recorded adequately for accurate reporting.
FAQs
Can I still get a refund for IRS Form 1120 (2018)?
No, the refund period for IRS Form 1120 (2018) closed on April 15, 2022. Filing now still helps correct taxable income, establish a net operating loss deduction, and reduce future corporate tax liability. Timely filing also avoids additional penalties under the Internal Revenue Code.
What is the penalty for late corporate income tax filing?
The penalty for filing late is five percent of unpaid income taxes per month, up to a maximum of 25 percent. A minimum penalty of $210 applies for returns that are more than 60 days overdue. Interest continues to accrue until the corporate tax liability is fully paid.
How does the corporate tax rate affect future tax years?
The 21 percent corporate tax rate, as outlined in the Tax Cuts and Jobs Act, applies to all tax years beginning in 2018. It affects taxable income calculations, federal income tax owed, and future NOL carryforwards. Corporations should apply consistent tax law treatment to ensure proper income reporting.
Can corporations claim a net operating loss deduction for 2018?
Yes, corporations may claim a net operating loss deduction for the 2018 tax year. However, losses can only offset up to 80 percent of federal taxable income and must be carried forward indefinitely. This change replaced the previous law allowing carrybacks to a preceding tax year.
How did the Jobs Act affect corporate tax revenue?
The Tax Cuts and Jobs Act reduced the corporate tax rate to 21 percent, lowering corporate tax revenue while simplifying the tax system. According to the Tax Foundation, this reform modernized U.S. corporate taxation, aligning it with international tax systems and improving competitiveness for C corporations.
For more resources on filing or understanding prior-year IRS forms, visit our guide on Business Income Tax Forms
