What California Form 100S Is For
California Form 100S is the annual state return for S corporations that operate in California or meet the state’s business activity rules. It reports taxable income under California law and calculates the corporation’s entity-level tax. S corporations pay the 1.5% tax on net income or the $800 minimum franchise tax.
The form also supports pass-through reporting through Schedule K-1 (Form 100S), which informs each shareholder of the amount of income, deductions, and credits to report on their own returns. It also captures any built-in gains or passive activity taxes owed by the corporation.
When You’d Use California Form 100S
You use California Form 100S when your S corporation operates in the state, is registered with the Secretary of State, or meets California’s “doing business” threshold. These thresholds are based on sales, property, or payroll amounts tied to California activity. The form is required even if the corporation has no income for the year.
For 2023, the return is due on the 15th day of the third month after the close of the taxable year, with an automatic extension available. You also use this form when filing an amended return on Form 100X or when reporting federal changes that affect your California tax. Find out why resolving unfiled federal returns is essential before preparing Form 100S, since many California adjustments rely on accurate federal data.
Key Rules or Details for 2023
The California Form 100S is the California S Corporation Franchise or Income Tax Return. The 2023 filing rules require careful attention to state-specific tax treatment. These rules can differ from the IRS version of the federal return, so corporations must check every adjustment that affects taxable income.
- S corporations must calculate their franchise tax by paying either 1.5% of taxable income or the $800 minimum tax, which is required even when the entity has little or no activity.
- California follows older IRC rules, so corporations must review depreciation, expense limits, and other lines that differ from federal treatment when preparing the original return.
- Corporations must make estimated tax payments during the year unless they are filing an initial return for their first calendar or fiscal year.
- Businesses that operate in more than one state must apply California’s apportionment rules, and they must complete Schedule R to report sales, property, and payroll within California.
- The FTB updates its instructions annually, so taxpayers should review the current guidance, forms, and filing requirements before completing the 2023 return.
Review how the IRS Collection Process applies when state or federal discrepancies on Form 100S result in unexpected balances or compliance notices.
Step-by-Step (High Level)
Follow these steps to complete California Form 100S for the 2023 tax year:
- Gather records: Collect your federal Form 1120-S, financial statements, prior returns, and details for income, deductions, and expenses.
- Compare it to the federal return: Review the differences between the IRS federal return and the California S Corporation Franchise or Income Tax Return.
- Make California adjustments: Adjust items such as depreciation, passive activity amounts, and any other figures that California treats differently under its IRC rules.
- Calculate taxable income: Determine California taxable income after all adjustments, including any additions or subtractions required by FTB instructions.
- Compute the franchise tax: Compare 1.5% of net income to the $800 minimum franchise tax and use the higher amount.
- Apply apportionment, if needed: If the business operates in more than one state, complete Schedule R to apportion sales, property, and payroll to California.
- Consider the PTE election: If eligible, decide whether to elect the Pass-Through Entity tax and pay it using the correct voucher or electronic payment method.
- Complete schedules and payments: Prepare Schedule K and Schedule K-1 (Form 100S), complete other schedules, confirm estimated payments and withholding, and then file Form 100S with the FTB.
Explore available Business Tax Relief programs that can support S corporations dealing with franchise tax obligations, interest, or multi-year filing corrections.
Common Mistakes and How to Avoid Them
Below are the issues S corporations often face when filing California Form 100S, along with simple steps to avoid them.
- Minimum Franchise Tax Missed: Some corporations overlook the $800 minimum franchise tax, particularly in years with low income. Set reminders for the first payment due date and confirm the amount on the final return.
- Federal Amounts Copied Without Adjustment: California follows different IRC rules, so federal amounts often need changes before appearing on Form 100S. Review the FTB instructions thoroughly and compare each federal line with the corresponding California requirements.
- Incorrect Apportionment Reporting: Errors occur when Schedule R does not include accurate sales, property, or payroll figures for multistate businesses. Use reliable records and verify calculations before completing apportionment lines.
- Schedule K-1 (100S) Errors: Mistakes in basis, credits, or passive activity details cause inaccurate shareholder reporting. Reconcile shareholder accounts and ensure totals match Schedule K.
- Late or Incomplete Filing: Late returns or missing schedules can trigger per-shareholder penalties. Ensure timely filing, utilize the automatic extension if necessary, and verify that all schedules are attached.
What Happens After You File
After you file California Form 100S, the FTB reviews the return to confirm your taxable income, franchise tax calculations, and any required schedules. The agency may mail a refund, a Notice of Tax Due, or a request for a replacement form if something is missing. You can manage finances, view payments, or sign in to your online FTB account if you need to track updates or create an account for online service access.
The FTB’s website may use cookies to support site functions, but it does not rely on advertising messages or advertisements when you review your filings. If the return includes adjustments for federal purposes or multistate activity, an FTB expert may request documents. Any change may impact shareholder income, so corporations should maintain organized records for future filings and tax purposes.
FAQs
Do we owe the $800 minimum franchise tax even if we had no income?
Yes, most S corporations are required to pay the $800 minimum franchise fee, even if they have no ordinary income. This rule applies to qualified corporations, limited partnerships, and any ineligible entity that meets these requirements.
How is California's S corporation taxation different from federal rules?
California requires adjustments to federal provisions before taxable income is calculated, which affects distributions, the disposition of capital assets, charitable contributions, and income for grant allocations. These passed so that the return reflects state rather than federal purposes.
When should we elect the Pass-Through Entity (PTE) tax for 2023?
The PTE election may help shareholders when reporting income for federal purposes, especially if ordinary income or royalties are benefited through the corporation, and it must be paid using the proper voucher, installment option, or electronic service.
How do shareholders report their income from the S corporation?
Shareholders report ordinary income, royalties, rebates, and other Schedule K-1 items on their individual California returns, while nonresidents report only California-source amounts. The tax to the owner must review the sections that apply to them.
What happens if we miss the filing deadline for Form 100S?
Missing the deadline may result in penalties, interest on unpaid funds, additional FTB mail notices, and the requirement to submit tax forms before processing can continue.
