Form 1120: Filing C-Corporation Income Taxes
- Reviewed by Paylocity's Compliance & Government Relations Team
What is Form 1120?
Internal Revenue Service Form 1120 is the federal C corporation tax return that employers file annually to report the organization’s financial performance and calculate its income tax obligations.
Form 1120 collects detailed information about the corporation’s income, deductions, credits, and overall financial status. Organizations must submit supporting financial documentation, such as income statements, to validate what is recorded.
Corporations also use the 1120 tax form to reconcile the taxes they have already paid through quarterly estimated payments with the amount they still owe.
Key Takeaways
- Form 1120 is used by C corporations to file their annual federal income taxes.
- Correctly completing and filing this tax return form is essential for corporations to accurately report their financial activity, comply with federal tax law, and avoid costly penalties.
- Form 1120 allows for electronic and mailed submissions, and filers can apply for an extension via Form 7004 if they can’t meet submission deadlines.
How Does a 1120 Form Differ from a 1120-S?
IRS Form 1120-S, conversely, is the federal S corporation tax form organizations use instead of an 1120 tax return to report their financial activity, including income, deductions, credits, and shareholder distributions.
Unlike a traditional C corp, an S corp does not pay federal income taxes but passes its profits and losses to individual shareholders who report the information on their personal tax returns. As such, when an S corporation files Form 1120-S, it also provides each shareholder with the corresponding Schedule K-1 document outlining their portion of the company’s financial results.
Why Does Federal Form 1120 Matter?
1120 tax forms are essential for corporate tax compliance and transparency with the IRS. They not only provide a standardized way for C corporations to report financial activity and clarify tax obligations, but they also help businesses avoid penalties and maintain their elected tax statuses.
Who Must Complete 1120 Corporate Tax Returns?
Most U.S. corporations, including those in bankruptcy, must file a 1120 federal tax form, regardless of whether they earned any income. This includes domestic entities (e.g., LLCs or partnerships) that choose to be taxed as corporations by filing Form 8832.
However, corporations owned by foreign entities, or those involved in farming or qualified opportunity funds, may have special company tax return requirements.
How to Complete a 1120 Tax Form
The 1120 corporate tax return has three main sections:
- Income: The company’s gross sales or profit, including any dividends, royalties, or interest a C corp received.
- Deductions: Any standard business expenses, such as advertising, wages, maintenance, etc.
- Tax and Payments: The organization’s total taxable income, minus any estimated tax payments, credits, past over- or underpayments, etc.
1120 Form Instructions
Form 1120 instructions sometimes require evidence listing the nature and amount of a specific income, deduction, credit, etc. Therefore, to complete the tax return, 1120 filers should collect documentation on total assets, income records (e.g., balance sheets, statements, etc.), and expense receipts (e.g., rent, utilities, payroll records, etc.)
| Section | Row/Cells | Details |
| TYPE OF FORM | Top of Form | Enter the organization’s name and address. |
| A | 1a | Select if the return serves as a consolidated return for multiple corporations or subsidiaries. In such cases, include a completed Form 851, a separate Form 1122 for each new subsidiary, and supporting statements for each corporation in the consolidated return. |
| 1b | Select if one of the subsidiary corporations in the consolidated return is a life insurance corporation and consult Code of Federal Regulations (CFR) Title 26 Section 1.1502-47(m) for instructions. | |
| 2 | Select if the corporation is a Personal Holding Company and include a Form 1120 Schedule PH with the return. | |
| 3 | Select if the company is a Personal Service Corporation (i.e., primarily engaged in fields like health, law, engineering, or accounting) where services are substantially performed by employee-owners during the prior tax year, unless the corporation is new. | |
| 4 | Select if the corporation’s total assets (either individually or total across the consolidated group of corporations) are worth $10 million or more, and include a Form 1120 Schedule M-3 with the return. | |
| B | N/A | Enter the corporation’s Employer Identification Number (EIN), or “Applied For” along with the application date if the corporation has applied for but has not yet received its EIN. |
| C | N/A | Enter the date the company was incorporated. |
| D | N/A | Enter the sum value of all the corporation’s assets at the end of the tax year. |
| E | 1 | Select if the corporation is filing this return for the first time. |
| 2 | Select if the corporation is filing this return for the last time due to no longer existing or becoming part of another corporation’s consolidated group. | |
| 3 | Select if the corporation changed its name since it last filed this return. | |
| 4 | Select if the corporation changed its address since it last filed this return. | |
| Income | 1a | Enter the gross receipts or sales for all business operations, except for amounts recorded on rows 4–10. Note: Special rules apply for advanced payments, installment sales, and non-accrual experiences for service providers. |
| 1b | Enter the total cash or credit refunds the corporation gave customers, such as rebates or merchandise returns. | |
| 1c | Enter the remaining amount after subtracting Line 1b from Line 1a. | |
| 2 | Enter the total amount calculated when completing Row 8 of Form 1125-A. | |
| 3 | Enter the remaining amount after subtracting Line 2 from Line 1c. | |
| 4 | Enter the total amount calculated when completing Row 23 of Form 1120 Schedule C (included below main Form 1120). | |
| 5 | Enter the total amount of taxable interest the corporation earned from loans, bonds, mortgages, etc., without reducing it by any related interest expenses. Note: Some special rules apply. |
|
| 6 | Enter the total gross income the corporation received from a rental property, minus certain expenses (e.g., repairs, depreciation, etc.), which should also be included on the appropriate line in the Deductions section. | |
| 7 | Enter total gross royalties received. | |
| 8 | Enter the total net capital gains income the corporation received from the sale or exchange of a capital asset, as calculated on Form 1120 Schedule D, and include a copy of the Schedule D form with the return. | |
| 9 | Enter the net gains or losses the corporation received from the sale, disposition, or involuntary conversion of business property and assets (capital and noncapital), as calculated on Line 17 of Form 4797, and include a copy of Form 4797 with the return. | |
| 10 | Enter the total amount of any other income not reported on lines 1–9, and include with the return a statement describing the type and amount of each income. | |
| 11 | Enter the sum of lines 3–10. | |
| Deductions* | 12 | Enter the deductible compensation paid to officers, excluding any amounts reported elsewhere on the return. Note: If the total amount is $500,000 or more, as calculated on Line 4 of Form 1125-E, enter that amount here and include a copy of Form 1125-E with the return. |
| 13 | Enter total salaries and wages paid to employees, excluding amounts reported elsewhere on the return or related to fringe benefits, and reduce the deduction if the company claims wage-related credits. | |
| 14 | Enter the total costs for routine repairs and maintenance that don’t improve or significantly restore company property, and only deduct amounts directly related to the corporation’s trade or business. | |
| 15 | Enter the total amount of debts that became wholly or partially worthless during the year, provided the amounts were previously included in income under the accrual method of accounting. | |
| 16 | Enter the total expenses paid or incurred for any rented or leased vehicles. Note: If the rental or lease was for 30 days or more, this deduction may be reduced by an inclusion amount. |
|
| 17 | Enter deductible taxes and licenses paid or accrued during the tax year, excluding federal income taxes, foreign income taxes (if claiming a credit), and any taxes already deducted elsewhere or tied to property acquisition or improvement. | |
| 18 | Report deductible business interest expenses, subject to certain limitations, without offsetting interest income and excluding nondeductible categories (e.g., prepaid interest or interest on tax-exempt debt). | |
| 19 | Enter deductible charitable contributions paid or authorized during the year, up to 10% of taxable income (with exceptions). Note: Some documentation and reporting requirements apply for certain donations (e.g., cash, property, qualified conservation donations). |
|
| 20 | Enter the total depreciation and cost amount for any property expensed under CFR Title 26 Section 179 and reported on Form 4562, including amounts not claimed on Form 1125-A. | |
| 21 | Enter the total amount lost due to the depletion of mineral property or standing timber in which the corporation has an economic interest. Note: If the depletion is to standing timber, include a completed Form T with the return. |
|
| 22 | Enter the total amount of deductible advertising expenses the corporation paid or incurred. | |
| 23 | Enter the total amount of deductible contributions made to qualified pension, profit-sharing, or other deferred compensation plans. | |
| 24 | Enter the total amount of contributions to employee benefit programs (e.g., health or insurance plans) that aren’t claimed elsewhere on the form and aren’t incidental to the amount entered on Line 23. | |
| 25 | Enter the total amount of expense paid or incurred to achieve energy efficiency of a commercial building, as calculated on Form 7205. | |
| 26 | Enter the total amount of any other allowed deductions not included elsewhere on the form, and include a statement listing the type and amount of each deduction with the return. Note: Some special rules apply. |
|
| 27 | Enter the sum of lines 12–26. | |
| 28 | Enter the corporation’s total taxable income before any net operating losses (NOLs) or special deductions are applied. Note: If CFR Title 26 Section 465’s “At-Risk Rules” apply, adjust this amount for any losses and include a completed Form 6198 with the return. |
|
| 29a | Enter the total amount of NOLs from the prior tax year, but only up to the corporation’s taxable income (after applying special deductions), and include a statement showing the calculations used to find the total NOL amount. | |
| 29b | Enter the sum of special deductions from Line 24 of Form 1120 Schedule C (included below main Form 1120). | |
| 29c | Enter the sum of lines 29a and 29b. | |
| Tax, Credits, and Payments | 30 | Enter the remaining amount after subtracting Line 29c from Line 28. Note: If the amount is zero or less, that NOL may be carried back (farming and insurance company loses only) or forwards as a deduction for other tax years. |
| 31 | Enter the total amount calculated on Line 12 of Form 1120 Schedule J (included below main Form 1120). | |
| 32 | LEAVE BLANK (intended for future use) | |
| 33 | Enter the total amount calculated on Line 23 of Form 1120 Schedule J (included below main Form 1120). | |
| 34 | Enter any estimated tax underpayment penalties and select the box if attaching a completed Form 2220. | |
| 35 OR 36 | Enter the total amount of tax owed (Line 35) or overpayment due to the corporation (Line 36) based on deducting the amount on Line 33 from the sum of lines 31 and 34. | |
| 37 | Enter how much of the Line 36 amount should be credited to estimated tax payments for the next tax year or refunded to the corporation. |
*Various limitations apply.
Form 1120 Schedule Documents
Form 1120 IRS instructions reference and require using additional “Schedule” documents included below the main 1120 form. These documents record and calculate other amounts necessary to determine if the corporation still owes taxes or is owed a refund for tax overpayment.
- Schedule C: Reports dividend income, inclusions, and special deductions affecting the corporation's taxable income.
- Schedule J: Calculates the corporation’s total tax liability or overpayment based on its taxable income, applied credits, estimated payments, etc.
- Schedule K: Summarizes the corporation’s key financial and tax information, including business activity, shareholder information, and other compliance-related details.
- Schedule L: Provides a snapshot of the corporation’s balance sheet at the beginning and end of the tax year, showing assets, liabilities, and equity.
- Schedule M-1: Explains any discrepancies between the net income or loss a corporation reports on its financial statements with the taxable income or loss it reports on Form 1120.
- Schedule M-2: Tracks changes in the corporation’s retained earnings during the year, including income, distributions, and adjustments.
Submitting Corporation Tax Form 1120
For most filers, the Form 1120 due date is the 15th day of the fourth month after the end of the corporation’s tax year.
However, if the corporation’s tax year is based on a fiscal year (July 1 – June 30) rather than a calendar year (January 1-December 31), then Form 1120 is due by the 15th day of the third month after the end of the tax year.
In either case, if the date falls on a weekend or federal holiday, it moves to the next business day.
For example, if a C corp’s tax year aligns with the calendar year and ends on December 31, its Form 1120 due date would be April 15 of the following calendar year. If, however, its tax year aligns with its fiscal year and ends on June 30, the due date would be September 15.
Furthermore, if a company cannot submit a completed business tax return form by that deadline, it may submit a completed Form 7004 by that same due date to request a Form 1120 extension.
Where to File Form 1120
IRS instructions for 1120 form filers allow for mail and electronic submissions, though some corporations (e.g., those filing 10 or more returns on or after January 1, 2024) must file forms electronically.
To electronically submit Form 1120, corporations must register for the IRS’s Modernized e-File (MeF) program and select an approved e-file provider.
Mailing C corp tax return submissions depends on whether the corporation wishes to use an IRS-approved Private Delivery Service (PDS) and which Form 1120 mailing address is most appropriate based on the corporation’s location and total assets.
Simplify Corporate Tax Filing with Paylocity
Accurately completing and submitting Form 1120 requires more than just an understanding of tax law. It also depends on having reliable systems to manage payroll data, track deductions, and generate financial reports for compliance.
Having an integrated payroll solution can streamline these everyday processes and corporation tax return responsibilities, taking the stress out of payroll administration with features such as:
- Centralized payroll and compensation records to support accurate reporting of officer wages, employee salaries, and benefit expenses.
- Robust documentation tools that easily upload, store, and retrieve important materials, such as income statements, employee information, and balance sheets.
- Tax geolocation audits to ensure the correct tax rates are applied based on the company’s location.
Request a demo today and see how much easier payroll administration can be.
Get Taxes Done Right, Without the Stress
We know there's a lot that goes into preparing and filing payroll tax forms. Save time and get support from our expert team. As a Registered Reporting Agent with the IRS, we can help prepare and file all the necessary forms you need to remain compliant - even in the face of changing legislation. Learn more here.
