What Form 1120 (2012) Is For
IRS Form 1120 (2012) serves as the federal corporation income tax return that C corporations use to report their income, deductions, gains, and losses for the tax year. It helps determine the corporation’s taxable income and overall income tax liability. Every domestic corporation must file, even if it has no taxable income or operates at a loss.
The form also applies to certain business entities that elect to be taxed as corporations. It includes detailed schedules for tax computation, balance sheets, retained earnings, and other financial statements. Foreign corporations engaged in U.S. business, along with parent corporations and controlled foreign corporations, must also file when required under federal tax law.
When You’d Use Form 1120
Corporations use Form 1120 to file their annual tax return for either a calendar year or a fiscal year. Calendar-year corporations file by March 15, while fiscal-year filers submit by the 15th day of the third month after their year-end. If the filing date falls on a weekend or a legal holiday, the due date is extended to the next business day.
Corporations that need additional time to prepare may file Form 7004 for an automatic extension. If errors are found after submission, corporations must file Form 1120X as an amended return. Late filing or underpayment of taxes results in penalties and interest, emphasizing the importance of timely and accurate filing.
For complete details on wage reporting, withholdings, and unemployment tax filings, see our guide to Business Income Tax Forms.
Key Rules or Details for 2012
For the 2012 tax year, the IRS made several updates to Form 1120 that affected how corporations reported their income and deductions.
Key 2012 Updates
- Corporations with total assets of $ 10 million or more that filed at least 250 returns annually were required to e-file their returns.
- Capital gains and losses from capital assets must be reported first on Form 8949 before transferring the totals to Schedule D.
- Corporations expecting to owe 500 dollars or more in income tax after credits were required to make quarterly estimated tax payments using the Electronic Federal Tax Payment System (EFTPS).
- Corporations with certain asset thresholds had to attach Schedule UTP (Uncertain Tax Position Statement).
- All domestic corporations, including limited liability companies that elected corporate status, were required to file unless specifically exempt under section 501.
- Foreign corporations engaged in U.S. business had to report their U.S. income and related activities.
These updates emphasized greater accuracy in tax computation, transparency for specified foreign financial assets, and compliance with federal tax rules.
Step-by-Step (High Level)
Completing Form 1120 (2012) requires accurate financial data and attention to schedules that affect taxable income and tax liability.
Step 1: Gather Financial Records
The corporation must collect all financial statements, including balance sheets, income statements, and documentation of gross receipts, cost of goods sold, deductible expenses, and prior year minimum tax credits.
Step 2: Enter Basic Information
The filer provides the corporation’s name, address, Employer Identification Number (EIN), and the accounting method used. It must also indicate whether this is an initial, amended, or final return.
Step 3: Report Income
The corporation reports gross profit, dividends, capital gains, interest income, and other income earned during the tax year.
Step 4: Calculate Deductions
The corporation lists deductible expenses, such as salaries, rents, taxes, interest, charitable contributions, depreciation, business interest expense, and other allowable deductions, to determine its taxable income.
Step 5: Complete Required Schedules
Depending on the corporation’s size and structure, additional schedules such as Schedule C (Dividends), Schedule G (Ownership of Voting Stock), Schedule L (Balance Sheets), and Schedule M-1 (Reconciliation of Income) may be required.
Step 6: Determine Tax and Credits
The filer uses Schedule J to calculate total tax liability, applying available tax credits and other taxes owed to determine the corporation’s total federal tax paid.
Step 7: Finalize and Submit
A corporate officer must sign and date the return to confirm accuracy. All supporting schedules and financial statements must be attached before submission.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
Corporations often make filing errors that lead to penalties or processing delays. The most frequent mistakes include the following:
- Missing the filing deadline: Corporations must meet the March 15 deadline or their designated fiscal year due date to avoid late-filing penalties.
- Failing to use Form 8949 for capital gains: Corporations should report capital gains transactions on Form 8949 to ensure consistency with Schedule D reporting.
- Omitting required schedules: Corporations should include all necessary schedules—such as C, J, L, M-1, and M-2—to prevent rejection of incomplete returns.
- Making arithmetic or transcription errors: All calculations should be verified to ensure accurate computation of taxable income and total tax liability.
- Filing a paper return when e-filing is required: Corporations required to e-file must do so to avoid rejection or compliance penalties.
Corporations can avoid these issues by reviewing all entries, verifying the accuracy of tax computations, and consulting a qualified tax professional when necessary.
What Happens After You File
Once submitted, the IRS reviews the corporation income tax return for completeness and mathematical accuracy. Electronic filings are typically processed more quickly than paper returns, and corporations can track their refund status through the IRS website.
If a corporation overpays its estimated tax liability, it may request a refund using Form 8050 for direct deposit. When additional tax is owed, payment must be made promptly to avoid penalties. The IRS may issue correspondence for clarification or documentation, and corporations are advised to retain all financial records, tax forms, and balance sheets for a minimum of three years for audit or verification purposes.
Frequently Asked Questions
What is IRS Form 1120 (2012) used for?
IRS Form 1120 (2012) is the official corporation income tax return for C corporations. It reports income, deductions, credits, and tax computation to determine taxable income and total federal tax paid for the tax year.
Who must file a corporation income tax return?
All domestic corporations, including calendar year corporations and fiscal-year filers, must file Form 1120. Foreign corporations engaged in U.S. business activities may also need to file, depending on their operations and taxable income earned in the United States.
How do estimated tax payments affect income tax liability?
Corporations that expect to owe $500 or more in federal taxes must make quarterly estimated tax payments. These payments reduce total tax liability and help avoid penalties for underpayment during the tax year.
What deductions are allowed on a corporate income tax return?
Corporations can calculate deductions for deductible expenses such as salaries, rents, depreciation, interest income, business interest expense, and charitable contributions. Correctly calculating deductions helps determine accurate net income and taxable income.
How does a corporation claim a refund for overpaid income taxes?
If a corporation overpays its estimated tax liability, it can request a corporate tax refund form, Form 8050, for direct deposit. Refunds are generally issued faster for e-filed returns than for paper submissions.
Why is accurate financial reporting critical for Form 1120?
Accurate financial statements, balance sheets, and gross receipts ensure the correct computation of taxes. Errors in financial reporting can affect the corporation’s tax liability, tax credits, or income tax returns for future tax years.
For more resources on filing or understanding prior-year IRS forms, visit our Form Summaries and Guides Library.
