Basic Guide to Corporate Income Taxes and Form 1120

Information Needed to File Form 1120 - Corporate Income Tax Return

Shredded US tax form
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How Does a Corporation Pay Income Taxes? 

A corporation is a separate entity from its owners (shareholders). As a separate entity, the corporation's owners do not pay the taxes for the corporation. A corporation pays income tax by filing a corporate tax return on Form 1120 and paying the taxes as indicated by this return. Corporate income taxes are paid at the corporate income tax rate, not the personal tax rate.

What is IRS Form 1120? 

 Form 1120 - U.S. Corporation Income Tax Return is the form used to report corporate income taxes to the IRS.  This form is complicated and the issues are complex, and you will most likely need to find a tax professional who is proficient in filing corporate taxes to prepare the form and do the filing for you. 

Due Date: Form 1120 must be filed by the 15th day of the 3rd month after the end of your corporation's tax year. If your corporation has a December 31 tax year-end, you would need to file this tax report by March 31. If that due date is a weekend or holiday, the return is due the next business day. 

Information for Form 1120 - What You Need and Where to Get It

Before you take the form to your tax preparer, you will need to know the information required to complete this form. The information in this article is a general outline of this form to get you started gathering information to file your corporate income tax return.

Not all details are included, so be sure to review the form to make sure you can answer all questions asked and provide all required information. 

Section 1 - Basic Information about Your Corporation

Basic information about the corporation, including name, address, Employer ID (EIN), date of incorporation, and total assets.

Your financial officers should have information about total assets; your corporate board secretary should have the rest of the information. 

Section 2 - Information About Corporate Income

Income by category, including gross receipts, cost of goods sold, dividends, interest, rents, royalties, and capital gains. Your corporate financial officer will have this information. 

Section 3 - Deductions - Tax-deductible Expenses

Your financial officers should have all of this information. You don't need to provide documentation, but you must have complete documentation on these expenditures in case of an audit. 

Section 4 - Tax, Refundable Credits, & Payments

Your corporation's financial officers should have this information.

Again, be sure you have documentation. 

Taxable income, tax from schedule, less any credits. If overpayment, refund amount. If underpayment, amount owed.

Schedules. Some are required (like the balance sheet), and others must be provided if information is listed on the return. If you have a service business, you won't have cost of goods sold, and you don't have to provide this schedule.  

  • Schedule A Cost of Goods Sold
  • Schedule C - Dividends and Special Deductions (NOTE: This is not the same Schedule C as the one completed by sole proprietors as part of their personal income tax returns) 
  • Compensation of officers
  • Schedule J - More detail on tax computation, including credits and other taxes
  • Schedule K - Other information, about accounting method, business type, NAICS classification number, ownership of stock and information about shareholders.
  • Schedule L - Balance Sheet per books, at the beginning of the year and the end of the year (the beginning balance sheet should be the same as last year's ending balance sheet.
  • Schedule M-1 Reconciliation of Income/Loss Per books with Income per return (this is a calculation your tax preparer will probably have to do.
  • Schedule M-2 Analysis of un-approrpriated retained earnings per books (another section your tax preparer will need to do).

If you would like more information about specific requirements and details about schedules, see IRS Form 1120 Instructions. 

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