Tax Form 1120, U.S. Corporation Income Tax Return

Tax Form 1120 is a U.S. tax form used by corporations to report their income, gains, losses, deductions, and credits to the Internal Revenue Service (IRS). The form is also known as the U.S. Corporation Income Tax Return.

Tax Form 1120 is usually used by corporations to obtain the tax liability or the kind of business tax owed by them. This is a kind of Internal Revenue Services tax form and is also known as U.S Corporation Income Tax Return. The form is used by American corporations to report their income to the IRS; including losses, gains, credits and deductions. However, there are present special types of forms for special organization types, these include:

• 1120-C: cooperative associations, such as farmers’ cooperatives
• 1120-F: foreign corporations
• 1120-H: condominium management, residential real estate management, timeshare association that elects to be treated as a homeowners association
• 1120-L: life insurance companies
• 1120-POL: political organizations
• 1120-S: S corporations

Who Needs to File the Tax Form 1120

This tax form needs to be filed by all domestic corporations despite not having any taxable income. However, the corporations that are exempted under section 501 need not file Tax Form 1120. The same applies to corporations facing bankruptcy. Following are the corporations that need to file Tax Form 1120:

• Those Businesses that have chosen to be Taxed as Corporations: These businesses need to also file Form 8832 and attach a copy of it along with Tax Form 1120
• The Limited Liability Companies-LLC: The Tax Form 1120 needs to be filed by the LLC only if they have chosen to be taxed as corporations. Tax Form 1065 is also filed by the partnership LLCs instead and the single-member LLCs generally file the taxes through the personal tax return of the owner. 
• Farming Corporations: The income and losses need to be reported through the filing of Tax Form 1120. 
• The Corporations With Ownership Interests in FASIT: This is also known as Financial Asset Securitization Investment Trust. 
• The Foreign-Owned Domestic Disregarded Entities:  If a corporation or a foreign person allows a 100% domestic Disregarded Entity-DE. In this case, the DE is considered to be separated from the foreign owner. One must know that the DE is a business with the IRS and is not considered separate from the owner. While the above two facts contradict each other, this is how it works. It is required that the foreign corporation or person needs to file Tax Form 1120 and also attach Tax form 5472. 

Along with the above, there are also certain schedules and documents that some specific corporations have to fill out as well. This includes the likes of Tax Form 1120 (Schedule N), which is required for foreign operations of US corporations and the Form Tax Form 1120 (Schedule D) for capital losses or gains. 

However, small corporations need not have to worry about additional forms. This can easily be found over the web under Form 1120” via the IRS’ Forms and Publications tool.

Note: One needs to take note that the business structure of the S corporation allows it to pass the corporate losses, income, deductions, and credits over to the shareholders for federal tax purposes. This ensures the case of double taxation as the individual shareholders are taxed instead of the corporations. 

The Instructions Included:

When to File: Tax Form 1120

The filing of Tax Form 1120 needs to be done by the corporations by the fifteenth day of the fourth month after the end of their tax year. In the case of new corporations, it is required that the filing should be done by the fifteenth day of the fourth month after their tax year ends, no matter how short the duration was.

• As in the case of the fiscal year that ends on June 30, the corporations must file Tax Form 1120, by the fifteenth day of the third month after the end of their tax year.
• In case of the due dates fall on Sundays, Saturdays or any public holidays, the date is extended to the next working business day. 
• In case you need an extension for the due date of filing, then you need to file an extension form 7004 that needs to be filed on your regular due date.

Read More: Tax Form 1310

Where to File?

The filing can be done electronically or by e-filing of the tax form 1120 along with any other forms as well. The same follows for attachments like form 7004, which is an automatic extension of the time file. Other such forms also include Forms 940, 941 and 944 (employment tax returns). 

In case you owe taxes to the IRS then one can authorize the payment of the tax, which can be withdrawn electronically from your account. Likewise, direct deposit of the funds can also be done. 

However, there are people who wish to opt for traditional mailing, in this case, one can use the Private Delivery Service-PDS. This is written proof of the mailing date. One can easily find the list of IRS-approved PDS on various official sites.

The Requirements for the Electronic Deposits

All the federal tax deposits need to be done through electronic funds transfers by the Corporations. These include the deposits of excise, employment, and corporate income tax. Usually, the Electronic Federal Tax Payment System or EFTPS is used to make electronic fund transfers. Nevertheless, there are corporations that do not wish to use the EFTPS, in such a case, they can easily opt for the tax professional, financial institutions, payroll services or any other trusted third party to make the deposits on their behalf. Likewise, a Same-day payment can also be arranged by the financial institutions on its behalf. 

• EFTPS: This is a free service that has been provided by the department of treasury. On the other hand, Services provided by a tax professional, financial institution, payroll service, or another third party may have a fee. 
• Making Deposits: The deposits that need to be done by EFTPS need to be made on time. This needs to be done by 8 pm on a working day, Eastern Time, on a day before the due date. However, there is a different cut-off if and when the corporation uses a third party to make the deposits. 
• The Wire-Payment Options: This is a same-day payment option when the corporate fails to make the payment by the EFTPS at 8 pm. Eastern time on a day before the due date. However, the wire payment using the Federal Tax Collection Services-FTCS can be used to still be one time. In order to use this service, the corporation will need to make arrangements with its financial institution ahead of time regarding availability, deadlines, and costs. A certain fee is usually charged by financial services when using this method of submission. One can get more information about the same from IRS.gov/SameDayWire.

The Penalties: Late Payment

When the corporation receives a notice informing about the penalties after the filing of the return, then one can send an explanation over to the IRS and reasonable-cause criteria can be determined by the IRS. However, be sure to not attach the explanation when the corporation’s return has been filed.

• Interest: In case of the late payment of the taxes, interest is charged, despite the extension of time to file might be granted. Likewise, the interest is also charged on the penalties that have been imposed on failure to file, fraud, negligence, substantial valuation, misstatements, substantial understatement of tax, and reportable transaction understatements from the due date (including extensions) to the date of payment. The interest charge can be calculated at the rate determined under section 6621.
• The Late Filing of Return: A penalty of 5% of the unpaid tax for every month, or the part of the month the return is late for up to a maximum of 25% of the unpaid taxes is imposed on the corporation that fails to file the tax return by the due date. This includes extension also. Over 60 days are the duration time for the imposition of the minimum penalty that equals to the smaller of the tax due or $210. However, the penalty can be lifted if the corporation offers proof of a valid reason of cause of the delay. 
• The Late Payment of Tax: A penalty of ½ of 1% of the unpaid taxes for every month, or a part of the month will be imposed on corporations that fail to pay the taxes within the due date. In this case, the Calender year needs to be used unless an exemption is met. 
• The Change of the Tax year: There are times when a corporation that includes a personal service corporation needs to acquire the consent of the IRS before it changes the tax year by filing Form 1128, Application to adopt, change or Retain a Tax year.

Who Uses the Forms: Tax Form 1120

This kind of filing is generally done by US corporations unless they fall into any of the exceptions listed above. For instance, the S corporations need not file Tax Form 1120. The S corporations are classified as corporations that pass the corporate income through the shareholder for the purpose of taxes. This is later reported by the shareholder in case of losses in income on the personal tax returns. In such a case the S corporations need to file Tax Form 2553 instead. Hence, one can easily state that you need to file Tax Form 1120 if you are categorized under a US corporation and meet the various criteria as stated previously.

The Exemption: Tax Form 1120

There are a few certain organizations that are exempted from taxes, these include:

• Charitable organizations
• Social welfare organizations
• Social clubs
• Trade associations
• Labour organizations
• Veterans’ organizations
• Political organizations

For such organizations, one must file the information return that includes Form 990, Form 990-EZ and Form 990-PF. These tax forms can be downloaded from the official website of the IRS.

Also Read: Integrating Circular 230 into the Tax Curriculum

Conclusion

It is mandatory that all qualifying corporations and organizations should duly file their tax return every year as stated by the IRS. This applies to all businesses of various sizes, small or big. This can be done either by traditional mail services as mentioned above or electronically.

Frequently Asked Questions(FAQs)