At a minimum, you must file Forms 1120S and Schedule K-1 for your S corp. 1. This form will report the amount of wages that an S Corp owes in unemployment taxes. These Schedule K-1s report each shareholder’s share … 1120S is a five page form from the IRS, which looks like this: You’ll need the following information on hand before filling out 1120S: The deadline for filing the form is 2 months and 15 days after the beginning of the tax year. It's worth paying for tax advice from a professional before opting for a certain tax status or preparing business taxes. The stock cannot be held by nonresident aliens. Want High Quality, Transparent, and Affordable Legal Services? This allows S corporations to avoid double taxation on the corporate income. Distributions and Salaries. You must submit the form by March 15 in order to qualify for an extension. An S Corp, also known as the subchapter or small business corporation, is a tax code that was enacted into law by Congress in 1958. It is due on January 31 of each year. Some states do not recognize S corporations--in other words, they treat S Corporations like C corporations. S-Corp distributions. Being classified as an S corporation employee has a potential big advantage: S corporation tax treatment can provide a way to take some money out of your business without paying employment taxes. This penalty stops at a max of 25 percent. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. If an S corp fails to file by deadline or the extended deadline, the IRS will penalize the company. Selling S corp shares generally generates capital gains, while asset sales can be capital gains or ordinary income depending on various factors. The S Corp then files payroll tax reports with the IRS to remit those taxes. An S corporation must always file its annual tax return by the 15th day of the third month following the end of the tax year, generally March 15 unless this date falls on a weekend or holiday. S-corps avoid the double taxation issue that C corps are subject to. Social security and Medicare taxes and income tax withholding. For example, if the S corporation dissolved on June 10, 2010, the final tax returns would be due Sept. 15, 2010. Use Form 1040-ES to report your payments to the IRS. Share it with your network! Was this document helpful? Note that you can still have an S corporation in these states--and that can still mean big federal tax savings--but the S corporation will only be an S corporation for federal tax purposes and not for state tax purposes. Here’s a quick look at the basic steps for a shareholder to report and pay taxes on S corporation income. Calculate your gross profit by subtracting line 2 from line 1c. List your income on Form 1120S. The minimum penalty is $195, which will be assessed for every month or just a portion of the month beyond the due date, multiplied by your company's number of shareholders. (This makes sense, given that Form 1120 is used for a regular corporation’s annual return.) Because C corps are considered taxable entities, the corporation is taxed and any dividends distributed to the owners are also taxed. S Corporation Information How to Take a Distribution from an S Corp. S Corporations can be a great way to reduce the amount of tax that you pay as a business owner. Complete and file an 1120S informational tax return. Understanding how to file S corp taxes ensures you stay legally compliant. LLC ‘s and S Corp’s are separate legal entities created by filing papers with the state. If there are any company shareholders who also earn a salary, you're responsible for payroll taxes. They also must submit a range of other tax forms, including those that relate to employee withholdings. 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