Form 1120-S (S Corporation Income Tax Return)
The annual federal income tax return filed by S corporations, which pass income, deductions, and credits through to shareholders via Schedule K-1.
Detailed Explanation
S corporations are pass-through entities under Subchapter S of the Internal Revenue Code, electing the status by filing Form 2553. They file Form 1120-S annually and issue each shareholder a Schedule K-1 reporting their share of income, deductions, and credits. S-corp shareholders who actively work in the business must take reasonable W-2 compensation before drawing distributions, a frequent IRS audit focus area.
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Learn about Business Tax PreparationRelated Terms
Form 2553 (S Corporation Election)
The IRS form used to elect S corporation tax status for an eligible domestic corporation or LLC, generally due within 75 days of the start of the tax year.
Schedule K-1
A tax document issued by partnerships, S corporations, estates, and trusts to report each owner's share of income, deductions, credits, and other tax items.
Pass-Through Entity
A business entity that does not pay federal income tax at the entity level; instead, profits and losses pass through to owners who report them on their individual returns.
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