Tax Form 1120 is commonly utilized by the US-based C corporations or LLCs categorized as corporations to file their income taxes. It leaves you with an understanding of the sum your business needs to pay in taxes. Our distinct Form 1120 instructions will help you understand the specs of this form.
What Is Form 1120?
If you incorporate a business in the US, you become in charge of reporting your credits, losses, income, and deductions to the IRS. Every American corporation is required to pay taxes each quarter. This is when you will need Form 1120, or a Corporation Income Tax Return form.
There is a series of specialized forms related to this document that you might require for your business:
- 1120-C: used by American cooperative associations;
- 1120-F: intended for foreign corporations;
- 1120-H: required by condominium management, residential real estate management, etc.;
- 1120-L: made for life insurance companies;
- 1120-S: utilized by S corporations.
Who Files Form 1120?
You must file Form 1120 if you run a domestic corporation even if you don’t have taxable income. Corporations exempt under section 501 do not need to file this document. Let’s look at these business categories more precisely:
- organizations that are taxed as corporations. If your company falls under this group, you must additionally file Form 8832 and attach its copy to the ready Form 1120;
- Limited liability companies or LLCs have to complete this form only if they are taxed as a corporation. Partnership LLCs use Form 1065 instead, and one-member LLCs commonly report their taxes throughout the owner’s personal federal tax return;
- corporations with an ownership interest in a Financial Asset Securitization Investment Trust (FASIT);
- farming corporations must also use an 1120 tax form to report their earnings or losses to the IRS;
- foreign-based domestic disregarded entities. A foreign person or corporation has to file this document if they own 100 percent of a domestic disregarded entity (DE). The reason is the domestic DE is treated separately from its owner in this case. The IRS doesn’t consider a disregarded entity to be a business separate from its owner. They have to attach Form 5472 to the completed Form 1120 as well.
How to Fill Out Form 1120
Though Form 1120 consists of six pages with blank fields, we can guide you through each of these areas:
- In the Company Information Menu, put your corporation’s name, address, TIN, and the date of incorporation.
- In the Name & Address Field, enter the name, title, and contact phone number of the person responsible for filing the tax return.
- In the Income Menu, specify the correct business activity gross receipts/sales from all business operations such as gross income/sales. Don’t report rental, portfolio, or other passive income here.
- In the Deductions Menu, enter deduction items related to the compensation of officers of your company.
- Define the tax computation and apply any credits and payments to the tax return in the Tax and Payments Menu. Enter any payments made by your corporation.
- Proceed to the Heading Information Menu. If your corporation is not obliged to complete Schedule L, enter the Total Assets according to the accounting method used for keeping your business documentation. If the assets and gross receipts of your corporation exceed $250,000, you have to complete Schedule L, so don’t enter the Total Assets here.
- In Schedule K, answer the questions related to the method of accounting (cash, accrual, etc.), business activity, product, and service.
- Schedule L requires choosing each asset corresponding to the corporation’s accounting records and specifying the accurate balances in every asset classification.
- Schedule M-1 serves to reconcile any differences between the book income /loss of your corporation to the income/loss reported on the tax return.
- Schedule M-2 defines the analysis of unappropriated retained earnings per book. Generate this Schedule regardless of whether you will make any adjustments.
When to File Form 1120?
When it comes to tax reports, it’s not just about the accuracy of the provided data but also about meeting certain deadlines. Form 1120 filing is required by the fifteenth day of the fourth month after the tax year closing.
Even if your corporation is freshly registered, you must file this form by the fifteenth day of the fourth month after the tax year-end, regardless of its duration. If your fiscal tax year ends on June 30, you must file Form 1120 by the fifteenth day of the third month after the end of your tax year. Deadlines that fall on weekends or legal holidays are extended to the following business day.
Where to File Corporation Income Tax Return Form?
There are several options you can use to file Form 1120 to the IRS. You can either send it online or by regular mail. If you decide to mail your tax return, be sure to address private delivery services that provide written proof of the mailing date.
If you choose to file this form electronically, you can address a specialized IRS Free File service or another reliable tax software. The latter option empowers you to fill out and file this form by yourself, without hiring a professional tax preparer. It is considered faster, easier, and reduces time spent on paperwork. Besides, some large C corporations that report $10 million or more in assets are obliged to file Form 1120 online.
Ease the Stress During Tax Time
Now that you are aware of all the specs and due dates of an 1120 form, you can thoroughly fill it out and send it to the IRS. Use specialized software to help you ease the procedure and report your income taxes on time.
Based on an article by pdfliner.com.
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