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Form 1120 Corporate Tax Returns Filing Tips and Penalties

Form 1120

The tax season is here, and if you own a US corporation, then you must be aware of Form 1120. But the complexity arises when you realize that there are various 1120 forms, and the requirements of all differ.

In this article, we will be covering what Form 1120 is, who files it, and why. Also, we will cover the need for this form to be filed. Letโ€™s get started then!

What is Form 1120?

Form 1120 is the Corporate Tax Return form for US-based corporations and is also known as the US Corporation Income Tax Return. It is an IRS-verified document that is used by US corporations to report their incomes, gains, deductions, losses, and credits. Moreover, it helps the corporation to estimate their tax liabilities as well as the business taxes they owe.

Who is required to file Form 1120, and why is it required?

By the books, all domestic corporations must file a Form 1120 to report their gains or losses. Many would think that it is not required during bankruptcy, but it is not the case. The corporations must file this form even if they donโ€™t have a taxable income to report to. However, a few corporations are exempt from filing this form and are mentioned under section 501.

It is important to file the form to meet with the US tax compliances set by the IRS otherwise penalties can be levied on the corporations.

Penalties for Failure of Filing

The penalty of failing to file 1120 is 5% of the unpaid taxes applied for each month or the part of the month for which the tax return filing got delayed. However, the penalty cannot exceed the limit of 25%.

In case the return was delayed and exceeds the time period of 60 days, then the minimum penalty of not filing the return is $435 or the actual tax that needs to be shown on the return (whichever is less).

NOTE: This amount of $435 and condition is applied only for the tax returns that need to be filled before 2023; i.e, for the years 2020, 2021, and 2022.

What is the deadline of filing Form 1120?

The duedate to file income tax returns for the corporations is April 15 after the end of tax year. It is usually for the corporations with the tax year ending on December 31. It is applicable even if the corporation is newly formed and hasnโ€™t completed a whole year.

However, the deadline for filing is March 15 for the corporations with the fiscal year ending on June 30.ย 

NOTE: If these dates fall on a weekend or a public holiday, the deadline shifts to the next date.

One can also file an extension if they do not have the complete documents or for some genuine reasons are unable to meet the deadline.

Where to file Form 1120?

You can either file the hardcopy of the form that is scannable or go for the efiling. However, filing for tax return needs specific understanding and an expertโ€™s guidance can help you in putting correct tax deductions to save an extra buck.

Therefore, to make sure you are not paying anything more than you are required to, reach out to the US tax experts in our team. Also, if you havenโ€™t issued 1099 yet, there is still the chance of going for the e-filing.

Written by โ€“ Priyanka Rampal

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