The form 1120-S is the tax return form for businesses registered as S corporations (S-corps).
S-Corps use this tax form to report any profits, losses, and deductions for that fiscal year.
S-Corps are pass-through tax entities––meaning the income “passes through” to the owners––the business income is reported on the shareholders’ personal income tax returns (1040).
Watch this video to learn about the most important sections of the 1120-S:
These are the 6 most important sections of the 1120-S
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Form Identification
This is the IRS Form name. For S-Corp, one is required to file a 1120-S Tax Return.
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Return Header
The return header includes important information about the business. This will include the business name, address, EIN (Employer Identification Number), S-election effective date, etc.
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Income
The income section includes any gross income earned within the tax year of the business.
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Expenses & Deductions
The expenses/deductions section includes the expenses for the business. These expenses can include, but are not limited to the categories listed on lines 7-18. On line 19, the tax preparer may attach a statement (see below) to include other categories such as dues & subscriptions, office expenses, travel, utilities, etc.
Example of Statement:
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Profit (or Loss)
Line 22 is the profit, or in some cases loss, of the business’ financial activity. Similar to the business’ income statement (P&L), this number is a calculation of income minus expenses. For more information about how to read an Income Statement, click here.
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Tax & Tax Payments
Most S-corps do not need information in this section as the income and tax liability passes to owners.
