Form 1120-S is used by S-Corporations to report the income, gains, losses, deductions, credits, etc., of a domestic corporation (or other entity) for any tax year an entity operates as an S-corporation. The IRS refers to this as an entity’s “election to be an S-Corporation.”
Who needs to file
Per the IRS website, A corporation or other entity must file Form 1120-S if (a) it elected to be an S-corporation. If you filed form 2553, the IRS accepted the election, and your election remains in effect, you need file form 1120-S during tax season.
Once you file Form 2553 you should have received written confirmation from the IRS that the form was accepted. If you didn’t receive notification (of an acceptance or a denial) within 2 months of filing this form (or within 5 months if you checked Box Q1), be sure to follow up with the IRS by phone. This is important because you should not file form 1120-S for any tax year before your S-Corp election takes effect.
What happens when election is terminated
Once the election is made, it stays in effect until it is terminated. If the election is terminated, the corporation (or a successor corporation) can make another election on Form 2553 only with IRS consent for any tax year before the fifth tax year after the first tax year in which the termination took effect. If none of this makes sense to you or you’re still wondering if you need to file form 1120-S as part of your 2022 taxes, be sure to consult with a licensed CPA.
An election can be terminated in one of three ways- and while this is a bit lengthy and complex to explain in a blog, your CPA can help you understand if your election has terminated (or if it may have been revoked.)
How to file
Lastly, S-Corporations can often file Form 1120-S related forms, such as schedules, statements, and attachments; Form 7004 (automatic extension of time to file); and Forms 940, 941, and 944 (employment tax returns), electronically. Form 1099 and other information returns can also be electronically filed. The option to e-file doesn’t, however, apply to certain returns.
If you have questions about whether you fall into the latter category, be sure to consult with a licensed CPA.
Do you have questions about whether you should plan to file form 1120-S for the 2022 tax year? We can help. Call our office today to speak with an expert.