The 1120 is the federal tax return form that corporations file every year

Form 1120 is the U.S. Corporation Income Tax Return. It is the form that C corporations use to report their income, deductions, and tax liability to the Internal Revenue Service (IRS) each year. If you own a business that is structured as a corporation, your business files this form — not you personally.

The 1120 is different from the forms that sole proprietors, partnerships, and S corporations file. A sole proprietor reports business income on Schedule C, which attaches to their personal 1040. A partnership files Form 1065. An S corporation files Form 1120-S. Only C corporations file the standard 1120.

The form itself is lengthy and detailed. It requires you to report gross income, cost of goods sold, operating expenses, capital gains or losses, and other items. At the end, you calculate the corporation's total tax liability. The IRS uses this information to determine how much federal income tax your corporation owes.

Key Takeaways

  • Form 1120 is filed by C corporations to report annual income and calculate federal tax liability to the IRS.
  • The form requires detailed reporting of gross income, deductions, expenses, and gains or losses for the tax year.
  • Corporations must file the 1120 by the 15th day of the fourth month after the end of their tax year — usually April 15 for calendar-year businesses.
  • If your business is structured as an S corporation, partnership, or sole proprietorship, you file a different form instead of the 1120.
  • The corporation pays tax on its net income; shareholders then pay personal income tax on dividends they receive from the corporation.

Who must file Form 1120

Any business organized as a C corporation must file Form 1120, with very few exceptions. This includes domestic corporations (incorporated in the United States) and foreign corporations that have income from U.S. sources. The corporation must file even if it had no income during the year, if it had a loss, or if it had income but owes no tax.

The main exception is an S corporation, which files Form 1120-S instead. An S corporation is a corporation that has made a special tax election with the IRS. Another exception is a corporation that is classified as a partnership or sole proprietorship for tax purposes — this can happen if a single-member LLC chooses to be taxed as a sole proprietorship, or a multi-member LLC chooses to be taxed as a partnership.

If you are unsure whether your business is a C corporation or another type of entity, check your articles of incorporation or the documents you filed with your state when you formed the business. You can also ask your tax preparer or accountant.

When Form 1120 is due

Form 1120 is due by the 15th day of the fourth month after the end of your corporation's tax year. For most corporations, the tax year is the calendar year (January 1 through December 31). For those corporations, the 1120 is due April 15.

If your corporation uses a different tax year — called a fiscal year — the deadline is still the 15th day of the fourth month after your year ends. For example, if your fiscal year runs from July 1 to June 30, your 1120 is due October 15.

You can request an automatic extension of six months by filing Form 7004 before the original due date. This moves your deadline to the 15th day of the 10th month after your tax year ends. However, an extension to file is not an extension to pay. If you owe tax, you must pay it by the original deadline or you will owe penalties and interest.

What information goes on Form 1120

The 1120 asks for basic information about your corporation: its name, address, employer identification number (EIN), and the tax year being reported. You then report income and deductions in several sections.

The income section includes gross receipts or sales, cost of goods sold, and gross profit. Below that, you list operating expenses such as salaries, rent, utilities, depreciation, and interest. You also report capital gains or losses from the sale of assets, dividend income, and other income sources. After subtracting all deductions and losses from income, you arrive at taxable income.

The tax section calculates the corporation's federal income tax using the current tax rate. You also report any tax payments the corporation made during the year through estimated tax payments, and any credits the corporation may claim. The result is the total tax owed or the refund due.

The difference between corporate tax and shareholder tax

A C corporation pays federal income tax on its net income at the corporate level. This is called double taxation because the income is taxed twice: once at the corporation and again when shareholders receive it.

Here is how it works: Your corporation earns $100,000 in profit. It pays federal income tax on that $100,000 (the rate depends on the year and current tax law). After paying tax, suppose $75,000 remains. If the corporation distributes that $75,000 to shareholders as dividends, each shareholder must report those dividends on their personal tax return and pay personal income tax on them.

This is different from an S corporation or partnership, where income passes through to the owners' personal tax returns and is taxed only once, at the owner level. That is why some small business owners choose to structure as an S corporation or LLC instead of a C corporation — to avoid double taxation.

Schedules and attachments that go with Form 1120

Form 1120 is rarely filed alone. Most corporations must attach additional schedules and forms that provide more detail about specific items reported on the main form.

Schedule C reports depreciation and amortization of assets. Schedule D reports capital gains and losses. Schedule J shows the corporation's income and tax by quarter. Schedule L is a balance sheet showing assets, liabilities, and equity at the beginning and end of the year. Schedule M-1 reconciles book income (what the corporation reports to shareholders) with taxable income (what it reports to the IRS). Form 4562 provides details on depreciation and Section 179 deductions.

Depending on the corporation's activities, other forms may be required. For example, Form 8949 is used if the corporation sold securities. Form 3115 is used if the corporation is changing its accounting method. Your tax preparer or accountant will determine which schedules and forms your specific corporation needs to file.

Where to file and how to file Form 1120

Form 1120 is filed with the IRS. You can file by mail or electronically. Most tax professionals and larger corporations file electronically because it is faster and the IRS processes it more quickly.

To file electronically, you must use IRS-approved tax software or work with a tax professional who has an IRS e-file account. The IRS website lists approved software providers. If you file by mail, send the form and all schedules to the IRS address listed in the form instructions — the address varies depending on whether you are enclosing a payment.

Keep a copy of the filed return and all supporting documents for your records. The IRS can audit a corporation's return for up to three years after filing (or longer in some cases), so you may need to produce these documents if the IRS has questions.

Frequently Asked Questions

Do I file Form 1120 if my corporation had no income?

Yes. A corporation must file Form 1120 even if it had no income, had a loss, or had income but owes no tax. The only exception is if the corporation was dissolved or ceased operations during the year and meets specific conditions. Check the form instructions or ask your tax preparer.

What is the difference between Form 1120 and Form 1120-S?

Form 1120 is for C corporations. Form 1120-S is for S corporations, which have made a special tax election with the IRS. S corporations pass income through to shareholders' personal returns; C corporations pay tax at the corporate level and shareholders pay tax again on dividends. The choice affects how much total tax you pay.

Can I file Form 1120 myself or do I need a tax professional?

You can file it yourself if you have accounting knowledge and access to tax software, but most corporations work with a tax professional or accountant. The form is complex, and mistakes can result in penalties. A professional can also identify deductions and strategies that reduce your tax liability.

What happens if I file Form 1120 late?

The IRS charges penalties for late filing and late payment. The failure-to-file penalty is usually 5 percent of unpaid tax per month, up to 25 percent. The failure-to-pay penalty is 0.5 percent per month. Interest also accrues on unpaid tax. File as soon as you can and contact the IRS if you need to discuss a payment plan.

Is Form 1120 the same as a corporate tax return?

Yes. Form 1120 is the federal corporate income tax return. Some states also require corporations to file state income tax returns, which may use a different form. Check with your state's tax authority to see what state forms your corporation must file.