Understanding IRS Form 1120 – U.S. Corporation Income Tax Return

A tax preparer learning how to file Form 1120 with TaxSlayer Pro

If you are preparing a return for a corporation or a business entity that chooses to be taxed as a corporation, you will use Form 1120 to report their income taxes. Almost all U.S. corporations are required to file a Form 1120, whether they have taxable income or not.

You will not need to complete Form 1120 if your client is a nonprofit organization that is exempt from federal income tax under section 501, or if the corporation has elected to file a special return. 

If your client has elected to be taxed as an S-Corporation, you will file Form 1120S Income Tax for Return for an S- Corporation.

When is the deadline to file Forms 1120 and 1120S?

Form 1120S is due on the 15th of the 3rd month after the end of the tax year. So, if your client’s tax year is based on the calendar year ending Dec. 31, Form 1120 must be filed by April 15th of the following year. 

Note: if your client is a shareholder in a corporation and must report the corporate income on their individual return, their deadline to file and pay that liability is the IRS due date, typically April 15th.

What you Need to Prepare Form 1120

To file Form 1120, you will need to complete the following three areas: 

Steps 1-7: Basic information about the corporation, including the name, address, EIN, and date of incorporation.

Steps 8-14: Income, assets, gross receipts, costs of goods sold, dividends, interest, rents and royalties, capital gains, deductions, credits and other items necessary to determine the tax liability of the Corporation.

Steps 19-22: Balance sheet and book income (Loss)

Read also: Creating a Basic Form 1120 – U.S. Corporation Income Tax Return

If you are preparing Form 1120S, you will need information from your client’s Schedule K-1 regarding shareholder income, deductions and distributions.

Read also: Creating a Basic Form 1120S – U.S. Income Tax Return for an S Corporation

U.S. Corporate Income Tax Rates

Beginning in tax year 2018, all U.S. corporations are taxed at a fixed rate of 21%.