What Is an 1120 Tax Form?
The IRS Form 1120 is provided for American domestic corporations to report their credits, special deductions , gains, losses, and income. The 1120 tax form also helps with tax computation so corporations can determine how much federal income tax they will need to pay for the year. If a corporation determines it will have a tax liability of $500 or more, it will need to make estimated tax payments using Form 1120-W in addition to the 1120 form.
Businesses should understand that the income tax paid by corporations is calculated using the corporate income tax rate of 21%, which is not the same as a personal income tax. IRS Form 1120 should be filed by all corporations or those taxed as corporations, except for S corporations .
Who Files IRS Form 1120?
The 1120 tax form is used by the Internal Revenue Service ( IRS ) to help corporations determine how much tax they owe for the previous year, also known as their income tax liability . Some will also refer to this form as the U.S. Corporation Income Tax Return .
Specifically, this form should be used by all businesses in the United States classified as C corporations . Corporations classified as S corporations will use Form 1120-S instead. S corporations must also fill out Schedule K -1 for each shareholder they have. This form gets included with the individual returns.
It's important to note that all corporations in the U.S. must file the 1120 IRS form , even if they will not have taxable income , including corporations in bankruptcy. The only corporations that don't need to file this form are those exempt under Section 501. These organizations will instead file an information return .
The following entities must file tax form 1120:
- Any business that has elected to be taxed as a corporation will need to fill out an 1120 tax form . This includes farming corporations, which will use the form to report their income and losses. These businesses must also make sure to fill out Form 8832, which will get attached to the IRS Form 1120.
- Limited liability companies ( LLCs ) will need to file this form in certain situations, specifically if they have elected to be taxed as a corporation.
- A foreign-owned domestic disregarded entity may also have to pay taxes using this form. If a foreign individual or corporation owns 100% of a domestic disregarded entity, the domestic disregarded entity will be treated separately from its international owner. The foreign owner or corporation must file Form 5472 to attach to their Form 1120.
- Ownership in a financial asset securitization investment trust (FASIT) also impacts filing. Corporations with ownership interest in this type of trust need to fill out Form 1120.
Those who need to fill out the 1120 tax form may find that they need to fill out an additional IRS form , depending on their situation. For example, Form 1120 Schedule N is for foreign operations of U.S. corporations. On the other hand, Form 1120 Schedule D is for capital gains and losses from the past fiscal year .
What Are the Special 1120 Forms?
There are specific forms that some corporations may need to file. These include:
- Regardless of whether a political group is a tax- exempt organization , they will use Form 1120-POL if they have taxable income from their organization.
- Cooperative organizations, such as farmers' cooperatives, also have a special form known as Form 1120-C.
- A foreign corporation will need to file Form 1120-F.
- Life insurance corporations file Form 1120-L.
- Certain real estate corporations, such as residential real estate management, condominium management, and timeshare management that decides to function as a homeowners association, need to file Form 1120-H.
I Just Started My Business. Do I Still Need to File?
Corporations must file taxes soon after they form. Even if you just went through the process of incorporation , you will need to file your taxes by the 15th day of the fourth month after the end of the tax year . This remains the rule even if the period is extremely short for you.
Therefore, businesses should familiarize themselves with their filing deadlines as soon as they establish their new corporation. They might owe forms and taxes to the IRS very quickly after the business entity forms.
How to Prepare Form 1120
If you need to file IRS Form 1120, you can get a copy here. The IRS allows you to electronically file the form or submit it by mail. When you get your copy of Form 1120, you will find it to be six pages long. You will need to have some information about your corporation ready as you prepare to fill out your form. Gathering this information ahead of time can help you fill out the form much more quickly.
At this point, you can decide to file the form yourself, use a tax professional, or take advantage of accounting software, such as the one offered by Skynova, to help fill out the form.
What Information Do You Need for Form 1120?
To fill out Form 1120, you'll want to make sure you have basic corporation information readily available. This includes:
- Your employer identification number (EIN)
- The date you incorporated
- Your name and address
- Your corporation's total assets and total income
- Your corporation's tax payments and refundable credits information
- The cost of goods sold (COGS)
- Any business tax credits (if applicable)
- Any deductibles , such as from charitable contributions
- Corporate income details, including gross receipts , dividends, interest, royalties, and capital gains net income
If you use Skynova's business templates for invoices, purchase orders, or receipts throughout the tax year , you'll be able to easily bring all of the information together when the year ends . This only makes it easier to fill out this critical form for your corporation.
How to File Your 1120 IRS Form
In most situations, the easiest way to file your 1120 tax form is electronically. You can e-file your IRS form through this system along with any other important business tax forms , including:
- Form 7004 (if you need an extension)
- Employment tax returns (Forms 940, 941, and 944 )
- Schedules and attachments needed for your form
When Is the Deadline to File Form 1120?
The tax preparer must know that the due date for the U.S. corporation income tax return will vary based on their corporation's year-end date. You will calculate your due date by determining the 15th day of the fourth month after the end of the company's fiscal year . In other words, your accounting method and how your corporation calculates its year matter more than the calendar year .
If you find you owe money in taxes on your corporate income tax return , you can authorize the money to be withdrawn automatically. If you need to request an extension, you will need to file Form 7004 by your standard due date so you don't incur any penalties.
What If You Made a Mistake on IRS Form 1120?
If you make a mistake filling out your 1120 tax form , such as overpayment , you will need to fill out an amended tax form using Form 1120X. This version of the 1120 form can only be used to correct a previously filled out Form 1120.
You must also make sure that this form is filled out within three years of filing the original 1120 tax form . Therefore, businesses must make sure that they keep a balance sheet and careful records of their accounting so they can avoid mistakes or catch any that occur as soon as possible.
Skynova's accounting software can help your business keep accurate records of income, expenses, sales tax, and payments. It's an intuitive program that can make filing Form 1120 even easier.
What Happens If You Miss the Form 1120 Filing Due Date?
IRS.gov states, "For returns due after 2019, the minimum penalty for failure to file a return that is more than 60 days late has increased to the smaller of the tax due or $435." In other words, corporations must make sure they file their IRS form and pay their tax liability on time.
However, this doesn't mean that extensions are impossible. If you know that you need a tax extension, you will need to file Form 7004 by your regular tax due date . Failing to do this will be considered a failure to file and will incur you the accrual of the aforementioned tax penalty.
How to Use Skynova's Accounting Software for Easy 1120 Form Filing
Skynova's accounting software makes accounting simple for corporations. Our goal is to help small businesses manage their various expenses, track their income, and understand their tax liability . Having all of this information, including Form 1120, reliably in one place for tax purposes makes it easy to file.