What California Form 100S (2024) Is For
California Form 100S (2024) is the required annual tax return for every S corporation doing business in the state or earning California-source income. Even though S corporations pass most items through to shareholders, California imposes an entity-level tax that must be computed on this form. Standard S corporations pay tax at 1.5% of net income, while financial S corporations pay 3.5%.
The form also captures California-specific adjustments that differ from federal law and generates each shareholder’s pro-rata information through Schedule K-1 (100S). For 2024, several nonconformity rules continue to apply, including California’s rejection of federal bonus depreciation, GILTI rules, and enhanced Section 179 expensing.
When You’d Use California Form 100S (2024)
You must file Form 100S if your corporation is incorporated in California, qualified with the Secretary of State, or considered to be “doing business” under state thresholds for sales, property, or payroll. S corporations deriving California-source income must also file, even if not formally registered in the state.
You’ll also use Form 100S when filing a past due return or when amending a previously filed return. California offers a six-month automatic extension for filing but not for paying tax. Amended filings require Form 100X and must be submitted within the applicable statute of limitations.
Key Rules or Details for 2024
Tax Rates and Minimum Tax
S corporations pay 1.5% of California net income (3.5% for financial corporations), with a minimum franchise tax of $800. First-year corporations formed or qualified with the Secretary of State are exempt from the $800 minimum for their initial taxable year. QSubs and reorganizations created to avoid the minimum tax do not receive this benefit.
Doing Business Thresholds
For 2024, a corporation is considered to be “doing business” if it meets any of the following:
- California sales exceed the lesser of $735,019 or 25% of total sales
- California property exceeds the lesser of $73,502 or 25% of total property
- California payroll exceeds the lesser of $73,502 or 25% of total compensation
Key 2024 Changes
- NOL suspension (2024–2026): No NOL deduction allowed if taxable income is $1 million or more, except disaster losses.
- $5 million annual credit limitation: Credits cannot reduce tax by more than $5 million (Low-Income Housing Credit excluded).
- Oil & gas deduction restrictions: No deduction for intangible drilling costs or percentage depletion for costs incurred on or after January 1, 2024.
- Wildfire mitigation payment exclusion: Applies to qualified amounts paid from 2024–2028.
Electronic Filing
If you use tax preparation software, you must e-file Form 100S through the Franchise Tax Board’s approved system.
Step-by-Step (High Level)
Step 1: Gather Corporate and Financial Records
Collect federal Form 1120-S, accounting records, shareholder information, and proof of estimated tax or extension payments.
Step 2: Complete Identification and Schedule Q Items
Enter the corporation’s legal name, FEIN, California corporation number, and Secretary of State file number. Complete Schedule Q questions about business activity, accounting methods, ownership, and final-return indicators.
Step 3: Calculate Business Income and State Adjustments
Start with federal ordinary business income, then make California adjustments on lines 2–13. Add back items such as foreign taxes or bonus depreciation and subtract allowable deductions such as dividend deductions. Apportion income using Schedule R if applicable.
Step 4: Apply Deductions and Compute Tax
Claim allowable deductions and NOLs if permitted. Multiply net income by 1.5% (or 3.5% for financial institutions), and compare with the $800 minimum franchise tax.
Step 5: Apply Credits and Special Taxes
Complete Schedule C (100S) for credits, then add any tax on built-in gains or excess net passive income. Apply the credit limitation if applicable.
Step 6: Finalize Payments and Assemble Schedules
Report estimated payments, withholding, and extension payments. Determine whether you owe additional tax or are due a refund. Prepare Schedules K and K-1 and include all required attachments. Mail the return to the correct FTB address or e-file through approved software.
You can find the form here: https://www.ftb.ca.gov/forms/search/
Common Mistakes and How to Avoid Them
- Incorrect ID numbers — Verify FEIN, California corporation number, and Secretary of State number.
- Using a DBA name — File using the legal name; list the DBA on Schedule Q.
- Not rounding to whole dollars — Round all amounts as required.
- Missing schedules — Attach Schedule R, all K-1s, credit forms, and FTB 4197 when needed.
- Using federal schedules instead of California versions — Always use the California K-1.
- Ignoring 2024 NOL suspension or credit caps — Check income thresholds before applying deductions or credits.
What Happens After You File
The Franchise Tax Board reviews your filing and verifies calculations, attachments, and corporate identifiers. Providing complete officer contact information helps resolve issues quickly. If clarification is needed, the FTB will send a notice requesting additional details.
Refunds are issued after processing, with direct deposit generally paying out faster. If you allocated an overpayment to next year’s estimated tax, that credit posts automatically and cannot be reversed. Penalties and interest may apply for late filing, late payment, or underpayment of estimated taxes, and additional penalties apply for missing information returns or failing to pay electronically when required.
Returns may be selected for audit within the standard review period, typically three to four years. Any federal audit adjustments must be reported to California, and shareholders must include their Schedule K-1 (100S) information on their individual California tax returns.
FAQs
What is the difference between California franchise tax and income tax for S corporations?
Franchise tax applies when a corporation is incorporated, qualified, or “doing business” in California, while income tax applies to corporations with California-source income but no business presence. Both use the same 1.5% rate and $800 minimum, but most S corporations fall under franchise tax rules.
Does a newly formed S corporation owe the $800 minimum tax for 2024?
No. Corporations formed or qualified with the Secretary of State in 2024 are exempt from the minimum franchise tax in their first taxable year. The minimum applies beginning in the second year.
How does the 2024–2026 NOL suspension work?
If taxable income is $1 million or more, you cannot use NOL carryovers except for disaster losses. NOLs continue to accumulate, and the carryover period is extended based on the year the loss occurred.
How does the $5 million credit limitation affect my filing?
Your combined credits cannot reduce tax by more than $5 million in 2024–2026, except for the Low-Income Housing Credit. Disallowed credits may be carried forward with an extended carryover period.
How are nonresident shareholders taxed on S corporation income?
California residents pay tax on all income, while nonresidents pay tax only on California-source amounts. Schedule K-1 (100S) shows each shareholder’s California-source portion.
What happens if we miss the March 15 filing deadline?
You automatically receive a six-month extension to file, but tax must still be paid by March 15 to avoid penalties and interest. Failure to pay on time can trigger late payment penalties and per-shareholder late filing charges.
