What Form 1120-S Is For
An S corporation uses Form 1120-S (2010) to report income, deductions, and credits to the Internal Revenue Service. An S corp is treated as a pass-through entity for federal tax purposes, meaning shareholder income, losses, and credits are reported on individual income tax returns. The corporation itself generally does not pay taxes on its income. The TA company must elect S corporation status using IRS Form 2553 to qualify for this status and meet eligibility requirements for shareholders and stock structure.
When You’d Use Form 1120-S (2010)
Corporations use this form each tax year to report business taxes, shareholder income, and other required details. The due date is the fifteenth day of the third month after the end of the tax year, typically March 15. If that date falls on a weekend or federal holiday, the due date moves to the next business day. Taxpayers can file Form 7004 to request an automatic six-month extension. Late filings may result in penalties based on the number of shareholders and the number of months late.
Key Rules or Details for 2010
- Start-Up Cost Deduction: S corporations could immediately deduct up to ten thousand dollars in start-up expenses for this tax year to lower overall business taxes.
- New Business Credits: Companies could claim credits for hiring certain workers, offering employee health insurance, or investing in qualified research and development.
- Electronic Filing Requirement: Corporations with total assets exceeding ten million dollars and filing at least 250 forms annually were required to e-file their tax returns.
- Section 444 Election: Eligible corporations could elect a fiscal year ending in a month other than December by filing Form 8716 and making annual payments on Form 8752.
- Reportable Transactions: S corporations involved in specified transactions, partnerships, or trusts must attach Form 8886 to ensure full compliance with IRS requirements.
Browse more tax form instructions and filing guides in our Forms Hub.
Step-by-Step (High Level)
Step 1: Gather Business Records
Corporations should collect all income statements, receipts, payroll records, and expense reports for the tax year. Having these documents ready helps ensure accurate completion of the tax return.
Step 2: Enter Income and Deductions
The corporation must enter gross receipts, returns, cost of goods sold, and ordinary deductions on the form. Accurate reporting of income and deductions is essential for Internal Revenue Service compliance.
Step 3: Complete Schedule K and Shareholder K-1 Forms
Each shareholder receives a Schedule K-1 showing their share of income, deductions, credits, and losses. The corporation must attach copies of these schedules to the IRS filing.
Step 4: Prepare Schedules L, M-1, and M-2
These schedules determine total assets, reconcile book and taxable income, and track the Accumulated Adjustments Account. Corporations with total receipts and assets under $250,000 may skip certain schedules.
Step 5: File and Provide Copies
A corporate officer must sign and file the return by the due date. The corporation should provide each shareholder with a copy of its Schedule K-1 to prepare their individual income tax returns.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
- Missing the Filing Date: Many corporations miss the March filing date. Companies should clearly mark the third-month deadline and file Form 7004 early if an extension is required.
- Incomplete Schedules: Some taxpayers fail to attach all required schedules or pages. They should review the instructions carefully and ensure all forms are complete before filing.
- Incorrect Shareholder Information: Errors in shareholder data or ownership percentages can result in penalties. Corporations should update and verify all shareholder details before submission.
- Combining Personal and Business Expenses: Businesses sometimes mix personal expenses with corporate deductions. Maintaining separate accounts helps protect accuracy and compliance.
- Ignoring Built-In Gains Taxes: Corporations that converted from C-corporation status must report any built-in gains. Tracking these items each tax year ensures accurate filings.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
Once the IRS receives Form 1120-S (2010), it reviews and processes the tax return. Shareholders use their K-1s to report income and deductions on personal returns. If the IRS finds inconsistencies, it may request clarification or additional documentation. Corporations should retain all records for at least three years to protect against audit issues and ensure data security. Keeping complete and organized records also helps when preparing future tax returns.
FAQs
How do I file IRS Form 1120-S (2010) for my S corporation?
You can file by mail or e-file through the IRS system. Corporations should review all forms for accuracy and attach the required schedules before submission.
What is the due date for Form 1120-S, and how do extensions work?
The due date is March 15, or the next business day if it falls on a weekend or holiday. File Form 7004 to request an extension.
Can I e-file my S-Corporation tax return with the Internal Revenue Service?
The IRS allows eligible corporations to e-file their tax returns. This provides faster processing, better security, and electronic confirmation of receipt.
What happens if I file my S corporation tax return late?
The IRS assesses penalties based on the number of shareholders and the number of months late. Filing on time or using extensions helps taxpayers avoid these costs.
How do shareholders report income from an S corporation's income tax return?
Each shareholder reports their income, deductions, and credits from Schedule K-1 on their individual income tax return. This ensures proper reporting for federal tax purposes.
Where can I find expert help for filing business taxes and Form 1120-S?
Taxpayers can seek expert help from licensed tax professionals or accountants. These experts provide guidance, answer questions, and help ensure complete and accurate filings.
