March 5, 2014

It’s that time of year…

If your company has made the S corp. tax election then it’s that important time of year: the deadline for filing your annual 1120S tax return with the IRS is fast approaching.  This S corp. tax return is due by March 15th each year (for 2014, it’s due March 17th because March 15th is a Saturday).

Even though all of your profits of your S corp. pass through to the owners and no tax is due at the entity level, you are still required to file a tax return (the 1120S) each year to report how you did.  This form tells the IRS how much gross revenue your S corp. generated during the prior calendar year, how much expenses were, and the amount of money that was distributed to the owners or held back in the S corp. (either way, the owners will pay income tax on this amount).

The most important thing to note about the deadline for the S corp tax return is that there is a stiff penalty for late filing: the penalty is $195 for each month or part of a month (up to 12 months) the return is late or does not include the required information, multiplied by the total number of persons who were owners of the S corp. during any part of the S corp’s tax year for which the return is due.  This is due even though no tax was due with the return!  And if you forgot to file the 1120S on time, then it is likely that you won’t remember until the IRS sends you a written reminder, which normally takes up to 6 months from the due date ($195 x # of owners x 6 = yikes!).

So be sure to get that 1120S in to the Internal Revenue Service on time.

Filed under FAQ