What Form 100S (2021) Is For
Form 100S (2021) is the California Corporation Franchise or Income Tax Return used by an S corporation to report franchise tax, income taxes, tax liability, and tax credits to the California Franchise Tax Board. Although S corporations are treated as pass-through entities for federal purposes, California law requires these business entity types to file a separate income tax return and pay the Minimum Franchise Tax or applicable business taxes for taxable years in which they operate.
When You’d Use Form 100S (2021)
This section explains when an S corporation is required to file Form 100S (2021) under California Franchise Tax rules.
- Active California S corporation: An S corporation that is incorporated, qualified, or doing business in California must file Form 100S (2021) to report net income, tax returns, and California Franchise Tax obligations.
- First Year filing requirement: A domestic corporation or foreign corporation must file Form 100S (2021) for its First Year after qualifying with the Secretary of State, even if income taxes are minimal.
- Entity conversion or restructuring: A business entity converting from a Limited Liability Company (LLC), California LLC, or Partnership Return of Income structure must file Form 100S (2021) once it becomes a qualified corporation.
- Short or inactive taxable years: An S corporation must still file Form 100S (2021) for short periods or inactive taxable years because the minimum tax applies regardless of activity level.
- Late or amended tax returns: Corporations correcting prior filings or federal changes must use Form 100S (2021) to update California income tax records with the California Franchise Tax Board.
Key Rules or Details for 2021 on Form 100S
The following rules outline how Form 100S (2021) applies to tax rates, credits, and filing requirements for the 2021 tax year.
- Minimum Franchise Tax requirement: California requires every S corporation to pay the Minimum Franchise Tax, also known as the minimum tax, even when the income tax return reports little or no net income.
- Entity-level tax treatment: Although S corporations are pass-through entities for federal purposes, California imposes a franchise tax at the entity level under its own laws.
- Required schedules: Form 100S (2021) may require Schedules K, K-1, A, or R to report ownership, passive activities, and income allocation.
- Available Tax Credits: Eligible corporations may claim Tax Credits such as the California Competes Tax Credit, California Research Credit, Motion Picture and Television Credit, Homeless Hiring Tax Credit, Main Street Small Business Tax Credit II, and New Employment Credit.
- Pass-through entity elective tax option: Certain S corporations may elect the Pass-through entity elective tax to manage California income tax liability more efficiently.
Step-by-Step (High Level)
This section outlines a high-level process for accurately preparing and submitting Form 100S (2021).
- Gather financial and entity records: The S corporation should collect prior tax returns, net income records, tax payments, Form 3522 confirmations, and federal filings such as Form 100 or Form 568 for reference purposes.
- Confirm entity classification: The filer must verify that the business entity is correctly classified as an S corporation rather than a Limited Liability Company, California LLC, or one of the disregarded entities under California law.
- Complete the income and allocation sections: The corporation should calculate its taxable income, apply the applicable tax rates, and complete Schedule A and Schedule R to determine the California income and franchise tax amounts.
- Report credits and tax payments: The filer must enter all tax payments, claim eligible Tax Credits, and confirm compliance with California Franchise Tax requirements.
- Submit the return electronically: The corporation should file Form 100S (2021) through the California FTB system, complete any required signing-up steps, and submit the return using the approved HTML format or online filing tools.
Common Mistakes and How to Avoid Them
The following mistakes commonly occur when filing Form 100S (2021), but each can be avoided with proper preparation and attention to detail.
- Missing the filing deadline: Corporations should confirm filing dates for taxable years and schedule tax payments early to avoid penalties imposed by the California Franchise Tax Board.
- Overlooking the Minimum Franchise Tax: Filers should always compare calculated income taxes with the Minimum Franchise Tax to ensure the correct minimum tax amount is paid.
- Incorrect entity information: Businesses should verify that business entity details, including domestic corporation or foreign corporation status, match Secretary of State records before filing.
- Missing required schedules: Corporations should carefully review filing requirements to determine which schedules, such as Schedule K, Schedule K-1, Schedule A, or Schedule R, must be included.
- Failing to claim available credits: Eligible corporations should review California Franchise Tax guidance to ensure credits such as the California Competes Tax Credit or California Research Credit are properly claimed.
What Happens After You File
After Form 100S (2021) is submitted, the California Franchise Tax Board reviews the income tax return, applies tax payments to the business account, and verifies compliance with California Franchise Tax rules. The California FTB may issue notices if clarification is required or if additional business taxes are due.
Corporations can monitor tax account activity, payment options, use tax obligations, and view tax returns through their online profile, including access to Spanish pages. They can securely close the session by selecting End Session.
FAQs
Is Form 100S (2021) connected to individual tax programs such as the Young Child Tax Credit?
Form 100S (2021) applies only to California S corporations and does not include individual programs, such as the Young Child Tax Credit, that appear on state tax returns filed by individuals.
Does Form 100S (2021) replace a California sales and use tax return?
No, Form 100S (2021) is an income tax return for California S corporations and does not replace a sales and use tax return. Businesses that sell taxable goods or services must file sales and use tax returns separately with the appropriate California tax agency.
Do California tax rates for sales and use tax affect how Form 100S (2021) is completed?
No, sales and use tax rates do not affect the calculation or filing of Form 100S (2021). This form is based on corporate income and franchise tax rules, not transaction-based tax rates applied to sales.
Does an S corporation need to sign up separately to file a sales and use tax return?
Yes, filing Form 100S (2021) does not automatically enroll a business for sales and use tax reporting. An S corporation must sign up separately with California’s tax authorities if it has an obligation to collect or report sales or use tax.
Is use tax reported on Form 100S (2021)?
No, use tax is not reported on Form 100S (2021). When applicable, use tax must be reported on a separate use tax return or through other approved California reporting methods, depending on the business’s filing status.
