What IRS Form 1120-L (2024) Is For

Life insurance companies use IRS Form 1120-L (2024) to report income, gains, losses, deductions, and credits to determine their federal income tax liability for the 2024 tax year. This specialized income tax return applies to entities providing life insurance or annuity contracts, including those operating under commercial-type life insurance arrangements. The Internal Revenue Service requires that the form accurately reflect all taxable income and deductions under the Internal Revenue Code.

The form must be filed by every domestic life insurance company and certain foreign corporations that would qualify as life insurance companies if they were incorporated in the United States. By completing this return, these corporations meet their annual filing requirements, ensure compliance with U.S. tax law, and maintain accurate records of company income, gains, and losses.

When You’d Use IRS Form 1120-L (2024)

You would use IRS Form 1120-L (2024) when your life insurance company needs to report or correct tax information for the 2024 tax year. This form is also required when responding to IRS notices, filing late, or amending prior submissions.

• Late filing: This applies when a company fails to meet the original due date of April 15, 2025, or the extended deadline of September 15, 2025, for its 2024 tax return.
  
  
• Amended return: This is used to correct errors, update financial details, or adjust reported income, deductions, or credits from a previously filed return.
  
  
• IRS notices: This is submitted in response to formal correspondence from the Internal Revenue Service concerning unfiled, incomplete, or inaccurate returns.
  
  
• Refund claims: This is filed to request a refund within three years of the original due date or within two years of the tax payment, whichever period ends later.

Key Rules or Details for the 2024 Tax Year

The 2024 tax year introduced several vital updates that life insurance companies must follow when completing IRS Form 1120-L (2024). These rules affect filing accuracy, penalties, and the calculation of taxable income and reserves.

• Penalty increases: The minimum penalty for late filing is $510 or 100 percent of the unpaid tax, whichever is smaller, for any return filed more than 60 days after the due date.
  
  
• Corporate Alternative Minimum Tax (CAMT): The IRS granted penalty relief for estimated tax payments related to the Corporate Alternative Minimum Tax liability during the 2024 tax year.
  
  
• Reserve accounting updates: Revised rules under Internal Revenue Code section 807 require accurate reserve calculations and compliance with updated testing methods.
  
  
• Policy acquisition costs: Section 848 continues to require capitalization and amortization of policy acquisition expenses over time rather than deducting them immediately.
  
  
• Schedule requirements: Corporations with total assets exceeding $10 million must complete and attach Schedule M-3 to provide a detailed financial and taxable income reconciliation.

Step-by-Step (High Level)

Filing IRS Form 1120-L (2024) requires careful preparation and accurate documentation to ensure compliance with federal tax reporting standards. Each step plays an essential role in completing the return correctly.

• Gather documents: Collect all annual statement data, balance sheets, supporting statements, and tax account transcripts that reflect the company’s gross income, deductions, and payments.
  
  
• Use the correct form: Always use the official 2024 version of Form 1120-L, even if filing late or submitting an amended return for a prior year.
  
  
• Attach schedules: Include Schedule D for capital gains, Schedule L for balance sheets, and Schedule M-3 if total assets exceed $10 million.
  
  
• Submit properly: File electronically through approved IRS e-filing systems or mail the completed return to the Ogden, Utah processing center with the “Amended Return” box checked when necessary.
  
  
• Maintain records: To comply with IRS recordkeeping requirements, retain copies of all filed forms, supporting documents, and proof of submission for at least three years.

Common Mistakes and How to Avoid Them

Avoiding common filing errors when completing IRS Form 1120-L (2024) helps prevent penalties, delays, and unnecessary IRS correspondence.

• Using the wrong form version: Always file the official 2024 version of Form 1120-L to ensure the IRS accepts the return and applies the correct tax year rules.
  
  
• Reserve calculation errors: Confirm that life insurance reserves meet the 50 percent reserves test and comply with section 807 to avoid misstatements in taxable income.
  
  
• Missing required schedules: Review filing requirements carefully to ensure that Schedule M-3, Schedule D, and other applicable forms are attached before submission.
  
  
• Improper capitalization of expenses: Apply section 848 rules to capitalize and amortize policy acquisition expenses correctly instead of deducting them in full.
  
  
• Dividend deduction miscalculations: Use the current IRS worksheet that reflects section 250 adjustments to calculate dividend deductions accurately.
  
  
• Unauthorized signatures: Ensure that an authorized corporate officer signs the return and that paid preparer information is included when applicable.

What Happens After You File

After submitting IRS Form 1120-L (2024), the Internal Revenue Service will issue an acknowledgment confirming receipt of your company’s return. Late or amended filings typically take longer to process, as the IRS must verify updated figures and review any supporting schedules. If additional details are required, the IRS will send correspondence requesting clarification or documentation. 

Companies that owe taxes should pay promptly to minimize interest and penalties, while those unable to pay in full may request an installment agreement using Form 9465. Taxpayers also have 30 days to appeal any proposed IRS adjustments.

FAQs

What are the instructions for Form 1120-L (2024)?

The IRS instructions for Form 1120-L (2024) explain how life insurance companies must file, calculate taxable income, and report deductions, gains, and losses. They also outline which corporations must file, the required schedules, and the proper format for reporting gross income and balance sheet data.

Can I e-file IRS Form 1120-L, or should I mail it?

You may e-file Form 1120-L electronically through approved IRS systems or mail it to the Ogden, Utah, processing center. The IRS encourages electronic filing for accuracy, faster processing, and confirmation of receipt. Always include your employer identification number and verify all supporting schedules before submission.

Do consolidated returns apply to life insurance companies?

Some corporations may file consolidated returns if they meet IRS eligibility criteria. However, specific rules apply to life insurance companies, including the need to complete Schedule L and other forms. Consulting a tax professional ensures compliance with these complex filing requirements.

Are estimated tax payments required for life insurance companies?

Life insurance companies must make estimated tax payments if their federal income tax liability is expected to exceed $500 for the year. These payments prevent underpayment penalties and help maintain financial health throughout the tax year.

Can policy loans or depreciable assets affect taxable income?

Policy loans, depreciable assets, and retained earnings can impact taxable income calculations on Form 1120-L. These figures must be included accurately in the income and deductions sections to reflect the company’s financial position under federal income tax regulations.