The number 1120 looks like a code straight out of a movie, but have you ever wondered about the official 1120 tax form definition? This form is the document that corporations file with the IRS every year, and it's a pretty important one.
Here's our team from Lewis.cpa provides everything you need to know about the form, including instructions for form 1120.
What Is 1120 Form?
So what is an 1120 tax form or a C corp tax form? Form 1120 is used by corporations in the United States to report their income and calculate their taxes.
The form is also used to report any gains or losses and any deductions or credits that apply. If your business is incorporated, you will probably have to use Form 1120 to file your taxes for the year. There are several other Form 1120 types that you should be aware of:
- 1120-C: Used by cooperative associations
- 1120-F: Used by foreign corporations
- 1120-H: Used by homeowners’ associations
- 1120-L: Used by life insurance companies
- 1120-PC: Used by property and casualty insurance companies
- 1120-REIT: Used by real estate investment trusts
- 1120-RIC: Used by mutual funds and investment companies
The form can calculate your tax liability — how much business tax you owe. In most cases, estimated taxes are paid quarterly based on the amount calculated on form 1120.
By filling out Form 1120, you can get an accurate estimate of your quarterly tax payments.
Who Must File Form 1120?
A C-Corp or a corporation is a separate legal entity from its owners. The company shareholders are not personally liable for any debts or actions of the corporation. If you have incorporated your business, you will have to file Form 1120 on an annual basis.
It's worth noting that S Corps don't have to file Form 1120. Instead, S Corps must file a Form 1120-S. Form 1120-S is filled with an attached schedule K-1 which reports what percentage of the S Corp's income or loss each shareholder must report their tax return to the IRS.
When to File Form 1120?
The Form 1120 deadline is on the 15th day of the 4th month after the end of the corporation's fiscal year. For example, if a corporation's fiscal year ends on December 31, the form 1120 is due on April 15 of the following year.
What You Need to Fill Form 1120
When filling out form 1120, here's a list of what you will need:
- The name, address, and employer identification number (EIN) of the corporation
- A balance sheet as of the beginning and end of the fiscal year
- An income statement
- Statement of changes in equity
- Statement of cash flows
- Statement of shareholders' equity
- A list of all shareholders and their respective ownership percentages
With this information in hand, you have everything you need to file.
How to File Form 1120 in 2022
If you’re wondering how to fill out Form 1120, following the Form 1120 instructions will make it pretty straightforward. You can file Form 1120 by mail or online. If you file by mail, send your Form 1120 to the address listed in the 1120 instructions.
When you opt to e-file Form 1120, you will need to create an account with the IRS e-file system and submit your Form 1120 electronically. Here are sections that you will need to fill out.
In this segment, you'll enter the name, address, and EIN of the corporation. This section is important because the IRS will use this information to process your Form 1120.
Deductions and Tax Deductible Expenses
In this section, you'll list all of the tax-deductible expenses that the corporation incurred during the fiscal year. These include things like advertising costs, employee salaries, and interest expenses.
Tax, Refundable Credits, and Payments
You'll calculate the corporation's income tax liability in this section. This liability includes any taxes owed to the federal government and any refundable credits or payments that the corporation is entitled to.
There are schedules that must be attached to form 1120 to complete this section. They include:
Schedule A — Cost of Goods Sold
This schedule calculates the cost of goods sold for the fiscal year. If your corporation doesn't have any expenses associated with goods or products sold, you don't need to attach this schedule.
Schedule C — Dividends and Special Deductions
Schedule C calculates the corporation's dividend income and special fiscal year deduction.
This schedule calculates the corporation's estimated tax liability for the current fiscal year. You can consult with a tax professional if you're uncertain about what to put in this section.
Schedule K lists the corporation's shareholders and reports the share of the corporation's credits, deductions, and income that each shareholder is entitled to.
This schedule reports the corporation's balance sheets as of the beginning and end of the fiscal year. Furthermore, any changes in the corporation's equity during the fiscal year must be reported on this schedule.
Schedule M-1 reconciles the corporation's net income or loss as reported on Form 1120 with its financial statements. This schedule is crucial since it ensures that the corporation reports its income and expenses correctly.
This schedule should only be completed if the corporation has accumulated earnings of over $250,000 at the end of the tax year.
Understanding the 1120 Form
IRS Form 1120 is an important form for corporations and can be quite complicated to fill. It's therefore important to consult with a tax professional if you're unsure of anything. Lewis CPA Group can help you with Form 1120 and all of your other corporate tax needs. Contact us today to get started!