This corresponds to IRS Form 1120S, which is the tax return form for an S corp. S corps offer several tax advantages. Follow standard accounting practices to close your books as you prepare to file your year-end S corp tax return. Form 2553 must either be filed by mail or fax, and if you choose to fax your forms, it’s important that you keep the original paperwork. The business is responsible for reporting all financial activity on Form 1120S and attaching a Schedule K-1 for each shareholder. Filing Past Due Tax Returns Before you decide not to file your tax return on time or not pay all of your taxes when they are due, consider this. If you have employees, you might also need to file a Federal Unemployment Tax Return (Form 940) every year. Remember to also make any estimated state tax payments that are required in your area. You'll still be liable for self-employment taxes on the salary portion of your income, but you'll just pay ordinary income tax on the distribution portion. Look up the taxes due from the tables in the previous year's instructions. There are several forms you'll have to file once a year or quarterly, but some business owners find the tax advantages worth the extra amount of hassle. If your S Corp pays wages of at least $1,500 in a quarter or has one or more employees working partial days throughout 20 or more weeks, then it usually has to file Form 940. As with a partnership, Schedules K and K-1 are used to show how the business’s different types of income and deductions are allocated among the owners. Understanding how to file S corp taxes ensures you stay legally compliant. How do I file my taxes as an S corp? Your business must qualify under certain rules: You'll have certain tax forms to submit as well as deadlines to adhere to. You might want to consult with a tax attorney or other tax professional to ensure you're making the right business decision. Making the S Corp Election Electing to have your business taxed as an S corporation requires filing Form 2553 with the IRS. LLC ‘s and S Corp’s are separate legal entities created by filing papers with the state. Pass-through taxation. S corporations are responsible for tax on certain built-in gains and passive income at the entity level. Read on to learn about some of the tax benefits of running an S Corp and how to pay yourself a salary from an S Corp. Just keep in mind that, while we’ve made every effort to ensure this information is up-to-date and accurate, it doesn’t constitute legal advice or tax advice, and it shouldn’t be considered a substitute for legal or tax advice. I have a question about how to file my taxes as an S-Corp or a C-Corp. in 2017 I was a C-Corp but I sent out my S-Corp - Answered by a verified Tax Professional The due date imposed is the fifteenth day of the third month after the S corporation dissolves. File IRS Form 7004. 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. If an S corp fails to pay estimated taxes on time, they may have to pay penalties and be subject to interest. 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. Because C corps are considered taxable entities, the corporation is taxed and any dividends distributed to the owners are also taxed. The K-1 information for each shareholder is reported on Schedule E of the person't individual income tax return. Some states do not recognize S corporations--in other words, they treat S Corporations like C corporations. You'll report payroll taxes on Forms 940 and 941. Instructions for Form 941 Employers QUARTERLY Federal Tax Return PDF, Instructions for Form 943 Employers Annual Federal Tax Return for Agricultural Employees PDF, Instructions for Form 940 Employers Annual Federal Unemployment (FUTA) Tax Return PDF. As an S corporation, you must file Form 1120S to report to the IRS any income, losses or deductions your business had. (If you already understand this, go ahead and skip to the next section.) If you do choose to file for S Corp status, the first step is to file IRS Form 2553. Want High Quality, Transparent, and Affordable Legal Services? As an S corporation shareholder, you can receive profits from the business in one of two forms: as a distribution, or; as a salary. Divide the yearly tax by four to find the amount of your quarterly estimated tax payments. Calculating Taxes on S Corporation Profits. Complete and file an 1120S informational tax return. (This makes sense, given that Form 1120 is used for a regular corporation’s annual return.) If an S corp is late in filing Form 941 and it owes a tax balance, the IRS will assess a 5 percent penalty for each month or partial month. This penalty stops at a max of 25 percent. You must submit the form by March 15 in order to qualify for an extension. Each quarter, S corps are required to pay estimated taxes. It's worth paying for tax advice from a professional before opting for a certain tax status or preparing business taxes. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb. If the company is late in filing Form 940, it's subject to similar penalties. S … S-corps will also need to issue Form W-2 to employees and Form 1099-MISC to independent contractors. 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