What California Form 100S Is For
California Form 100S is the state franchise and income tax return required for S corporations operating in or registered with California. Even though S corporations pass income through to shareholders federally, California imposes its own entity-level tax. The form calculates the corporation’s California tax liability and reconciles adjustments required because the state does not fully conform to federal tax law.
Corporations incorporated in California, qualified with the Secretary of State, doing business in the state, or earning California-source income must file. For tax year 2022, the state reinstated Net Operating Loss deductions and removed the credit limitation, giving corporations greater flexibility than in the prior year.
When You’d Use California Form 100S
You must use Form 100S to file the annual S corporation franchise or income tax return. This requirement applies whether the corporation is active, inactive, profitable, or operating at a loss, as long as it maintains California registration or business presence.
Form 100S is also used when filing after the due date. California provides a six-month filing extension automatically, but taxes are still due by the original deadline. If corrections are needed, the corporation files Form 100X to amend. Refund claims for 2022 may generally be filed until March 15, 2027.
Key Rules or Details for 2022
Tax Rates and Minimum Franchise Tax
For 2022, S corporations pay the greater of:
- 1.5% of California apportioned net income
- $800 minimum franchise tax
Financial S corporations, such as banks and credit unions, pay 3.5%. Certain items can also be taxed at 8.84%, including built-in gains recognized during the recognition period and excess passive income.
Doing Business Standards
California considers an entity “doing business” in the state if it exceeds any of these thresholds for 2022:
- More than $690,144 in California sales
- More than $69,015 in California payroll
- More than $69,015 in California property
- At least 25% of total sales, property, or payroll in California
The thresholds include the corporation’s pro rata share from partnerships or other pass-through interests.
California–Federal Nonconformity
California follows the Internal Revenue Code as of January 1, 2015, so many federal provisions do not apply. Adjustments are required for items such as:
- Bonus depreciation
- GILTI inclusions
- Opportunity zone deferrals
- Enhanced federal Section 179 limits
- Business interest limitations under IRC §163(j)
These state adjustments help determine California taxable income and are documented on related schedules.
Credits and Special Provisions for 2022
With the repeal of the NOL suspension and credit limitation, corporations regained the ability to fully apply NOLs and use credits to offset their tax liability. Additional incentives available for 2022 included the Homeless Hiring Tax Credit and certain industry-specific credits carried forward from prior years.
Step-by-Step (High Level)
Step 1: Prepare the Federal Return
Complete federal Form 1120-S first. California calculations begin with federal income, so accurate federal numbers are essential before moving to the state return.
Step 2: Gather Documents
Collect the corporation’s FEIN, California corporation number, prior-year overpayment information, estimated tax vouchers, withholding documents, and apportionment details if operating in multiple states.
Step 3: Enter Identification and Income Information
On Form 100S, list the corporation’s legal name, mailing address, and Secretary of State details. Complete the income, deduction, and adjustment lines to compute California taxable income. All Schedule Q questions must be answered and supporting schedules attached when required.
Step 4: Calculate Tax and Apply Credits
Apply the 1.5% or 3.5% tax rate to apportioned net income. Compare the result to the $800 minimum franchise tax and take the higher amount. Add tax on built-in gains or passive income if applicable, then subtract allowable credits to determine the final tax owed.
Step 5: Reconcile Payments and Refunds
Enter estimated payments, withholding, extension payments, and credits carried forward. Calculate whether additional tax is owed or whether a refund is due. For refunds, direct deposit information may be provided for faster processing.
Step 6: Complete Schedules K and K-1 and File
Prepare Schedule K and a separate Schedule K-1 (100S) for each shareholder. Assemble the return with Form 100S on top, followed by supporting schedules and included federal forms. File electronically if required, or mail to the Franchise Tax Board. Payments may be submitted through Web Pay.
Common Mistakes and How to Avoid Them
- Incorrect identification details – Confirm the legal entity name, FEIN, and California corporation number match Secretary of State records.
- Omitting the $800 minimum tax – Except for first-year corporations, the minimum applies even with no income.
- Improper paper assembly – Do not staple pages; place forms in the required order to avoid processing delays.
- Missing short-year notation – Write “short year” clearly on the form and list correct beginning and ending dates.
- Incorrect or missing Schedule K-1 entries – Each shareholder must receive a complete K-1, and copies must be attached to the return.
- Ignoring California adjustments – Review federal items that must be added back or modified for state purposes.
- Incorrect withholding for nonresident shareholders – Apply required withholding and report it on Schedules K and K-1.
What Happens After You File
When the Franchise Tax Board receives Form 100S, it reviews the return for accuracy and completeness. If a refund is requested and direct deposit information is provided, refunds generally process more quickly. Otherwise, the FTB will mail a paper check to the address on file.
If tax was not paid by the March 15 deadline, interest begins accumulating immediately and continues until the balance is paid. The FTB may also issue penalty notices or request additional documentation. Processing notices typically provide a response deadline, often around 60 days.
Corporations are required to maintain records supporting all return items, including apportionment factors, income classifications, and shareholder allocations. Significant penalties may apply for failing to maintain proper documentation. Shareholders then use Schedule K-1 (100S) amounts to prepare their individual California income tax returns, even when no cash distribution was made.
FAQs
Is an S corporation required to pay the $800 minimum franchise tax?
Yes. All S corporations owe the $800 minimum tax annually unless it is their first taxable year after incorporating or qualifying in California.
What tax rate applies to California S corporations?
Regular S corporations pay 1.5% of California net income or $800, whichever is greater. Financial S corporations pay 3.5%, and some items may be taxed at 8.84%.
When is Form 100S due for 2022?
The return is due March 15 for calendar-year filers. California provides an automatic six-month extension to file, but all tax must still be paid by the original deadline. Form FTB 3539 is used for extension payments.
What penalties apply for late filing or late payment?
Late filing may result in a 5% monthly penalty on unpaid tax plus an additional per-shareholder penalty. Late payment adds a 5% penalty and 0.5% per month. Interest applies to all unpaid amounts and cannot be waived.
Do shareholders owe tax even if no distributions were made?
Yes. Shareholders must report their pass-through income from Schedule K-1 (100S) on their individual California returns, regardless of distributions.
Where can I find Form 100S?
You can access Form 100S on the Franchise Tax Board website: https://www.ftb.ca.gov/forms/
