What IRS Form 1120-S (2019) Is For
IRS Form 1120-S (2019) is the U.S. Income Tax Return for an S corporation. It reports income, capital gains, losses, deductions, refundable credits, and other items for corporations that elected S corporation status using Form 2553 and received approval from the Internal Revenue Service. An S corporation is a pass-through entity, meaning each shareholder’s share of income, deductions, and credits is reported on their individual income tax return through Schedule K-1.
This tax return is used by small business owners, partnerships, and corporations to show total income earned and deductions claimed. It applies to any eligible business that qualifies under the IRS criteria for S corporation status. Reporting all income and tax deduction amounts correctly helps taxpayers avoid errors and ensures that all payments and credits are accurately tracked for the tax year.
If your business has missing filings from earlier years, reviewing any unfiled 1120-S S corporation returns can help you avoid penalties and ensure IRS compliance.
When You’d Use Form 1120-S for 2019 (Late or Amended Filing)
You would file a late IRS Form 1120-S (2019) if you missed the March 16, 2020, due date or received a notice from the IRS for an unfiled tax return. Late filings may occur for many reasons, including missed estimated tax payments or delays in gathering income tax records. An amended tax return should be filed if you discover mistakes in income, other items, or shareholders’ share allocations.
Refund claims for the 2019 tax year expired April 15, 2023. However, you can still file to correct information or request a reduction in future penalties. Taxpayers may also submit a request for reasonable cause penalty relief if delays were unavoidable. Ensuring that the proper form, payment, and address are used can prevent future issues.
If you need help determining which forms, schedules, or corrections apply for a late or amended filing, the IRS Form Help Center provides clear guidance for older-year S corporation returns.
Key Rules Specific to 2019
- Late Filing Penalties: The minimum penalty under IRC 6699 was $200 per shareholder per month, up to 12 months, for failing to file an S corporation tax return on time.
- Failure-to-File Penalty: Returns more than 60 days late were subject to a file penalty of $210 or 100% of the unpaid tax, whichever was smaller.
- Qualified Business Income Deduction (QBI): 2019 was the first year that S corporations were required to report the QBI deduction on Schedule K-1, including all qualified business income, qualified items, and qualified trades or businesses.
- Interest and Penalty Charges: The IRS charges interest daily until the full balance is paid. The penalty continues even after the filing date if taxes remain unpaid.
The Internal Revenue Service requires taxpayers to maintain records for all taxes, income earned, guaranteed payments, and any QBI deduction amounts reported on the return. S corporations dealing with penalties, corrections, or qualified business income issues may find support through available business tax relief programs designed to help businesses resolve IRS matters:
Step-by-Step (High Level)
- Gather Transcripts: Obtain Account and Record of Account Transcripts from IRS.gov or by completing Form 4506-T. These show income, deductions, and taxes paid.
- Complete the Correct Form: Use the 2019 version of Form 1120-S for that specific tax year. The page's last reviewed or updated date on IRS.gov ensures that you are using the proper edition.
- Prepare Schedules: Include Schedule K-1 for each shareholder, Schedule L for assets, and other supporting schedules such as Schedule D for capital gains or Form 8825 for rental business activity.
- Mail or E-File: Submit your tax return using an IRS-approved e-file provider or mail it to the correct IRS address. Include all supporting forms, payments, and signatures.
- Maintain Records: Keep a complete copy of the return, including schedules, payments, extensions, and correspondence. Accurate records help verify income tax return details and ensure future compliance.
If your corporation owes a balance after completing Form 1120-S, you may request an IRS payment plan to manage the remaining amount over time.
Common Mistakes and How to Avoid Them
- Missing Schedules: Always attach Schedule K-1 for every shareholder to report each shareholder’s share of income and deductions.
- Incorrect Allocations: Verify that pass-through entity allocations between Schedule K and individual K-1s match.
- Errors in Balances: Misreporting assets or accumulated adjustments on Schedule M-2 can cause discrepancies.
- Unpaid Compensation: Pay reasonable compensation to shareholder-employees before making distributions to prevent IRS reclassification.
- Built-In Gains Tax: Correctly calculate built-in gains tax if your S corporation was formerly a C corporation or disregarded entity.
- Invalid S Election: Never file Form 1120-S without an approved election, or the corporation may be treated as a standard C corporation.
Filing accurate reports of business income, deductions, and payments protects both owners and the entity from additional IRS charges or interest.
What Happens After You File
After submitting Form 1120-S (2019), the IRS generally processes returns within six to eight weeks. Taxpayers may receive confirmation notices, assessment letters, or balance updates. The locked padlock icon on IRS.gov indicates a secure system for online access to transcripts and filing status.
If your corporation owes a balance, you may apply online for a payment plan using Form 9465. The penalty continues until full payment is made, but setting up an installment agreement helps reduce the likelihood of additional enforcement actions. The IRS may charge interest and penalties during the repayment period.
Taxpayers can also request extensions or file for abatement if they meet eligibility criteria. Keeping contact information, addresses, and records up to date ensures timely communication from the Internal Revenue Service.
FAQs
What is IRS Form 1120-S (2019) used for?
An S corporation uses IRS Form 1120-S (2019) to report income, deductions, credits, and capital gains to the Internal Revenue Service. It provides information on each shareholder’s share of income and qualified business income for their individual income tax return, helping to determine any taxes or payments due.
How does the qualified business income deduction apply to an S corporation?
The qualified business income deduction allows eligible shareholders to deduct up to 20% of their qualified business income from an S corporation. This deduction is calculated based on skilled trades, guaranteed payments, and other items listed on Schedule K-1. It helps reduce the overall income tax for small business owners.
What happens if I receive a file penalty for a late tax return?
If you file your IRS Form 1120-S (2019) late, the Internal Revenue Service may impose a filing penalty and interest. The pay penalty continues monthly until all taxes are paid in full. Taxpayers may request relief for reasonable cause; however, interest charges are generally not waived.
How do shareholders report their shareholders’ share of income?
Each shareholder reports their share of income, other items, deductions, and credits from the S corporation on their individual income tax return. This is done using the Schedule K-1 provided by the corporation. Accurate reporting ensures that each partner or shareholder pays only the tax required for their share.
What if my Form 1120 includes other items or corrections?
If your Form 1120-S (2019) includes other items that require correction, you can file an amended return. Include all schedules, supporting documents, and explanations for any changes. Filing a complete and accurate amended return helps avoid future penalties and ensures that taxpayers meet all IRS filing standards.
