Understanding Form 1120: U.S. Corporation Income Tax Return
Who Needs to File Form 1120?
Form 1120 is required to be filed by:
1.C Corporations: All domestic C corporations must file Form 1120, even if they have no taxable income.
2.Foreign Corporations: Foreign corporations engaged in a trade or business in the United States must file Form 1120 to report their U.S. source income.
3.Corporations in Bankruptcy: Corporations undergoing bankruptcy proceedings are still required to file Form 1120.
Key Components of Form 1120
Form 1120 is composed of several sections, each requiring specific financial and operational information:
1.Identifying Information: This includes the corporation’s name, address, Employer Identification Number (EIN), and the date of incorporation.
2.Income: This section captures the corporation’s gross receipts or sales, cost of goods sold, gross profit, and total income.
3.Deductions: Corporations can claim various deductions, such as salaries and wages, repairs and maintenance, bad debts, rent, taxes, and interest.
4.Tax and Payments: This part calculates the corporation’s tax liability after accounting for credits and payments already made.
5.Schedule C (Dividends and Special Deductions): Corporations report dividends received and special deductions that reduce taxable income.
6.Schedule J (Tax Computation and Payment): This section is used to calculate the total tax liability and includes information on estimated tax payments and overpayments.
7.Schedule K (Other Information): Here, the corporation provides additional information, such as accounting methods, business activity codes, and details about shareholders.
Filing Deadlines and Extensions
The filing deadline for Form 1120 is the 15th day of the fourth month after the end of the corporation’s tax year. For most corporations operating on a calendar year basis, this means the deadline is April 15th. Corporations can request a six-month extension by filing Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns.
