What IRS Form 1120-S (2022) Is For
IRS Form 1120-S (2022) is the annual income tax return that S corporations must file to report their corporation's income, losses, deductions, and credits to the IRS. Any corporation that has elected S corporation status by filing Form 2553 and received IRS approval must file this form, even when no tax is owed for the current tax year.
Form 1120-S serves as the corporation’s annual tax return for federal tax purposes and ensures that each shareholder’s share of income, deductions, and credits is reported on their individual income tax return. As a pass-through entity, an S corporation’s income and losses flow directly to shareholders, avoiding double taxation that affects C corporations. This structure supports small business owners by simplifying the process of paying tax on their share of profits and losses.
When You’d Use Form 1120-S for 2022 (Late or Amended Filing)
You would file IRS Form 1120-S (2022) late if the corporation missed the March 15, 2023, deadline without an extension or received IRS notices about a missing income tax return. An amended return may be filed to correct taxable income, deductions, and credits, or a shareholder’s share of profits or losses. Filing late or amending ensures compliance with the Internal Revenue Code and protects the corporation’s standing for future tax years.
Late filings also support accurate tax preparation for financial institutions, partnerships, or other entity relationships. Amended returns can also adjust capital gains, other income, and deductions that were incorrectly reported in the original corporate income tax return.
For complete details on wage reporting, withholdings, and unemployment tax filings, see our guide to Business Income Tax Forms.
Key Rules Specific to 2022
- Minimum Late Filing Penalty: The minimum penalty for returns filed more than 60 days late is $450, plus additional penalties per shareholder.
- Section 174 Rule: Research and experimental expenses must be amortized over five years, ending before immediate deductions.
- COVID-Related Credits: Qualified sick and family leave wages for periods ending before October 1, 2021, can still be reported on 2022 filings.
- Schedule K-1 Penalties: Failure to issue Schedule K-1s on time may result in a $290 penalty per shareholder.
Step-by-Step (High Level)
- Gather Records and Transcripts: Obtain gross income details, sales, dividends, and expenses using an IRS business account or Form 4506-T.
- Complete the Correct Form: Use the 2022 version of IRS Form 1120-S to ensure the corporation files for the proper calendar year or fiscal tax year.
- Prepare Schedule K-1s: Report each shareholder’s share of income, deductions, credits, capital gains, and other income accurately.
- Attach Required Schedules: Include Schedule M-2, Schedule L, Part II, Part III, and other forms as required for the corporation’s income and expenses.
- File Electronically: E-file to speed up processing, or mail the completed form to the IRS. Corporations filing 250 or more forms are required to e-file, unless waived.
- Retain Copies: Keep records of all filed forms, proof of payment, and shareholder K-1s for future business and tax years.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
- Incorrect Shareholder Allocations: Verify each shareholder’s or partner’s ownership percentage before filing to ensure income, deductions, and credits are correctly reported.
- Errors in AAA Tracking: Regularly reconcile the Accumulated Adjustments Account to maintain accurate taxable and gross income reporting.
- Unreasonable Compensation: Establish and document fair salaries for shareholder-employees before making distributions to reduce the risk of IRS audits.
- Schedule M-1 Reconciliation Errors: Compare book income and taxable income carefully to ensure all adjustments are recorded and profits or losses are correctly stated.
- Incorrect EINs or Missing Information: Review all identifying details before submission to prevent delays in processing or e-file rejections.
- Ignoring State Filing Obligations: Check state-specific filing and amendment requirements to remain compliant when federal changes affect the return.
What Happens After You File
The IRS typically processes e-filed corporate income tax returns within 21 days and paper returns in about six to eight weeks. The agency may issue notices requesting more information or assessing penalties for late filings or underpaid taxes.
If the corporation cannot pay tax owed, it should still file the return and then request an installment agreement using Form 9465. Penalties and interest continue until the balance is paid. Filing on time ensures compliance with the Internal Revenue Code and supports the maintenance of accurate tax liability records for future years.
FAQs
What penalties apply for filing my IRS Form 1120-S (2022) income tax return late?
The IRS may assess $220 per shareholder per month for up to 12 months for the late filing of the Form 1120. A minimum penalty of $450 applies for returns more than 60 days late. Additional penalties may be accrued for unpaid income tax or other income amounts. Filing promptly limits charges on the corporation’s tax liability.
How does IRS Form 1120-S 2022 affect my income tax return and capital gains?
Shareholders report their share of profits, losses, deductions, and credits, and capital gains from the corporation on their individual income tax return. Since S corporations are pass-through entities, they avoid double taxation that applies to C corporations, ensuring that business profits are taxed only once at the shareholder level.
Can a disregarded entity or other entity file Form 1120-S?
A disregarded entity cannot file Form 1120-S because it is not recognized separately for federal tax purposes. Only eligible corporations that meet the S corporation election requirements under the Internal Revenue Code are eligible to file. These corporations must have only one class of stock and operate as a small business or pass-through entity.
How do I report gross income and other income on Form 1120-S, Part II and Part III?
Gross income includes all sales, dividends, and interest from business activities. Other income may include rental income, energy credits, and foreign tax credit amounts. Report all income deductions and credits accurately in Part II and Part III to ensure correct taxable income reporting for the corporation’s tax year.
What deductions and credits can I claim on Form 1120-S?
Corporations can claim deductions and credits for ordinary and necessary business expenses, energy credits, and other allowable deductions. Each shareholder’s share of losses, deductions, and credits is reflected on Schedule K-1 and then reported on their personal tax returns. This process ensures accurate income deductions reporting and helps avoid double taxation.
