What Form 100S (2020) Is For
Form 100S (2020) is the California S Corporation Franchise or income tax return used by S corporations to report income taxes owed to the California Franchise Tax Board. This income tax return applies even though S corporations are treated as pass-through entities for federal purposes. The form reports gross income, calculates franchise tax liability, and confirms whether qualified corporations qualify for first-year exemptions from the minimum franchise tax.
When You’d Use Form 100S (2020)
Form 100S (2020) is required in several everyday California business and compliance scenarios that affect S corporations.
- California S corporation operating in the state: A corporation must file this return when it is actively doing business in California or earning income from California sources, regardless of where it was initially formed.
- Reporting pass-through income or losses to shareholders: The return is required when income, deductions, or credits must be allocated to shareholders using Schedule K-1 for inclusion on individual returns.
- Reconciling federal and California tax reporting: Corporations must file when differences exist between federal reporting on Form 1120 and California tax rules, including adjustments based on federal adjusted gross income calculations.
- Requesting additional time to file or pay: The form is required when submitting a Payment for Automatic Extension for Corporations and Exempt organizations to avoid late-filing penalties.
- Confirming entity-level filing requirements: S corporations must file this return instead of entity-level returns, such as Form 568, Form 565, the Partnership Return of Income, the Limited Liability Company Return of Income, or business schedules like Schedule C, which apply to other entity types.
Key Rules or Details for Tax Year 2020
Several vital rules explicitly applied to S corporations filing Form 100S (2020) for the 2020 tax year.
- Minimum franchise tax requirements: Most S corporations were required to pay the $800 minimum franchise tax, while qualified corporations in their first taxable year were exempt from this requirement.
- Estimate payments and installment percentages: Corporations were required to make estimated payments in installments based on prescribed percentages during the fourth, sixth, and twelfth months of the taxable year.
- Federal and California tax nonconformity: California did not conform to specific federal income tax provisions reported on Form 1120, which required additional adjustments when preparing the California return.
- Credit limitations and carryovers: Certain business credits, including limits related to the California Earned Income Tax Credit at the shareholder level, were subject to restrictions and extended carryover periods for the 2020 tax year.
- Electronic filing and payment mandates: Corporations meeting payment thresholds were required to file using an online filing application and submit electronic payments through approved California Franchise Tax Board systems.
Step-by-Step (High Level)
Filing Form 100S (2020) follows a structured process designed to align federal and California reporting requirements.
- Gather federal and state records: Corporations should collect Form 1120, prior-year California returns, and records supporting federal adjusted gross income and gross income calculations.
- Reconcile California tax adjustments: Taxpayers must adjust income and deductions to reflect differences between federal law and California requirements before completing the return.
- Prepare schedules and supporting forms: Required schedules, including Schedule K-1 and depreciation forms such as Form 3885L, must be completed and attached to the return.
- Calculate tax liability and payments: Corporations must compute the franchise tax owed, apply estimated costs, and confirm that any extension payments meet the minimum requirements.
- Submit the return electronically: The completed income tax return must be filed using an approved online filing application, along with all required attachments and confirmations.
Common Mistakes and How to Avoid Them
Errors on Form 100S (2020) often result from using incorrect forms or misunderstanding entity-level requirements.
- Using individual income tax returns: Corporations should not file California Resident Income Tax Return, California Nonresident or Part-Year Resident Income Tax Return, Part-Year Resident Income Tax Return, Form 540NR, or Form 540 2EZ, as these forms apply only to individuals.
- Filing the wrong business entity return: S corporations must avoid using Form 568, Form 565, or Partnership Return of Income, which are reserved for limited liability companies and partnerships.
- Incorrect withholding or payment reporting: Forms such as Form 592, Form 592-B, and Form 593 should only be used when specific withholding obligations apply and should not be used to replace franchise tax reporting.
- Omitting required depreciation or credit forms: Corporations should ensure that supporting forms, such as Form 3885L and Form 3554, are included when applicable to avoid processing delays.
- Submitting unrelated state or administrative forms: Filers should avoid attaching forms such as Form Utah or Form IH-6, which do not apply to California S corporation filings.
What Happens After You File
Once Form 100S (2020) is filed, the California Franchise Tax Board (FTB) reviews the return for completeness, verifies attached schedules, and checks that tax payments and payment amounts match reported liability. If tax is overpaid, a refund is issued either by check or direct deposit. If there is an unpaid liability, penalties and interest may apply.
Any errors or missing forms may trigger a notice or request for clarification. If the FTB selects the return for audit, the corporation may be asked to provide documentation related to income, deductions, or shareholder allocations.
FAQs
When is Form 100S (2020) required even if the corporation has no income?
The form is still required if the S corporation is registered and doing business in California, even if it reports zero taxable income or holds assets, such as inactive gold.
Are School District Income Tax obligations included on Form 100S (2020)?
No, the school district income tax applies in other jurisdictions and is not reported on California business tax forms, such as Form 100S.
Can I request bulk orders of Form 100S (2020) for professional use?
Yes, tax professionals may request bulk orders of paper forms through the Franchise Tax Board for use with multiple clients or for archival needs.
How does apportioning trade affect the filing of Form 100S (2020)?
Corporations with income from multiple states must use apportionment trade rules and market assignment to allocate income correctly on the form.
Are all tax forms required to be submitted electronically?
Yes, Form 100S (2020) and supporting schedules must be filed electronically if tax software is used, in accordance with California’s mandatory e-file requirement.
