Form 1120-S: Filing S-Corporation Income Taxes

Investigate Form 1120-S, its requirements, where to submit one, and how payroll software can support S Corp tax compliance.

Reviewed by Paylocity's Compliance & Government Relations Team

Tax Resource

August 06, 2025

What is Form 1120-S?

Internal Revenue Service (IRS) Form 1120-S is the annual federal tax return S corporations use to report their financial activity to the federal government, including income, deductions, credits, and shareholder distributions.

Rather than paying corporate income taxes, S corporations pass income, losses, deductions, and credits directly to their shareholders, who report them on their personal tax returns. This “pass-through” structure helps avoid double taxation, which is possible with traditional C corporations.

Along with the main form, S corporations must complete various schedule documents that detail ownership, income, and financial positions. For example, when filing its tax returns, each S corp must provide shareholders with a Schedule K-1 document outlining their portion of the company’s financial results.

Key Takeaways

Form 1120-S is the annual federal tax return S corporations use to report income, deductions, credits, and shareholder allocations.
Unlike Form 1120 for C corporations (which are liable for their own income taxes), Form 1120-S supports an S corporation’s pass-through tax status that distributes profits and income tax liability among the business’s shareholders.
Businesses can file their returns electronically or via mail, though the IRS strongly encourages the former.

What’s the Difference Between Forms 1120 vs. 1120-S?

IRS Form 1120 is the C corporation counterpart to an S corporation’s 1120-S form. Without a pass-through structure, C corporations retain their revenue, profits, losses, etc., which makes them liable for federal income taxes.

As such, each C corporation must annually file a 1120 tax form to report its financial activity and calculate how much it owes in federal income tax versus how much it’s already remitted via quarterly estimate payments. Supporting financial documents (e.g., financial statements) are also typically required.

What is Form 1120-S For?

A 1120-S form helps S corporations and their shareholders meet annual tax obligations while preserving the business’s pass-through tax status. It outlines the company’s financial activity and ownership details while distributing critical tax information to shareholders via the form’s Schedule K-1 document.

This, in turn, allows shareholders to accurately calculate and file their own income tax returns based on their share of the company’s gains or losses.

Who Must Complete IRS Form 1120-S?

Most corporations must file a federal tax return, regardless of whether they earned income. Organizations electing to be taxed as an S corporation by submitting Form 2553 must, therefore, file tax Form 1120-S for their company tax return, but only after the IRS approves the submitted Form 2553.

In other words, companies that don’t start as an S corp but later file to be taxed as one should not file this S corp tax form for any year before the effective date of the IRS’s approval.

How to Fill Out an S Corp 1120-S Form

Per IRS instructions, Form 1120-S filers must gather and report a range of business details, such as their Employer Identification Number (EIN), date of incorporation, total assets, business activity code, and S corporation status effective date.

From there, each S corporation tax form collects detailed financial data, such as gross income (e.g., sales, rental income, capital gains), allowable deductions (e.g., salaries, rent, and utilities), and any applicable business tax credits.

Form 1120-S Instructions

Like a 1120 form, the instructions for 1120-S include three primary sections:

Income: Gross profits, sales, dividends, royalties, etc.
Deductions: Standard business expenses (e.g., operating costs, advertising, maintenance, etc.)
Tax and Payments: Total taxable income after deducting credits, quarterly estimated tax payments, and over- or under-payments from prior tax years.

Before starting an S corporation tax return, filers should type or print the business’s name and address in the provided fields at the top of the form.

Section	Row/Cell	Detail
A	N/A	Enter the date the IRS approved the company’s S corporation status.
B		Enter the company’s Principal Business Activity Code, which is derived from the North American Industry Classification System (NAICS) and used to classify the company’s main line of business.
C		Select if the corporation is voluntarily filing a Form 1120-S Schedule M-3 or must do so due to possessing $10 million or more in assets at the end of the tax year. Note: Corporations with between $10–50 million in assets may either complete the entire Schedule M-3 or only Part 1 along with a completed Form 1120-S Schedule M-1 (included below main 1120-S form), provided that the amounts on Schedule M-1 Line 1 and Schedule M-3 Line 11 match.
D		Enter the corporation’s EIN (or “Applied For”) along with the application date if the corporation has applied for but has not yet received its EIN.
E		Enter the date the company was incorporated.
F		Enter the sum value of all the corporation’s assets at the end of the tax year. Note: If the corporation must complete a Form 1120-S Schedule L (included below main 1120-S form), enter the Schedule L Line 15 Column (d) amount here.
G		Select based on whether the corporation wants to become an S corp for this tax year. If “Yes,” attach a completed Form 2553 with the return, though submitting it with Form 1120-S is generally considered a “late” election that requires reasonable cause for the IRS to approve S corp status.
H	1	Select if the corporation is filing this return for the last time due to no longer existing.
	2	Select if the corporation changed its name since it last filed this return.
	3	Select if the corporation changed its address since it last filed this return.
	4	Select if this return amends a previously submitted return.
	5	Select if the corporation is ending its S corp status.
I	N/A	Enter how many individuals were shareholders that tax year.
J	1	Select if the corporation is aggregating At-Risk activities under CFR Title 26 Section 465.
J	2	Select if the corporation is aggregating Passive activities under CFR Title 26 Section 469.
*Income	1a	Enter all business operations’ gross receipts or sales, except for amounts recorded on rows 4 and 5. Note: Special rules apply for advanced payments and installment sales.
	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 net gains or losses the corporation received from the sale, disposition, or involuntary conversion of assets (i.e., no rental activities), as calculated on Line 17 of Form 4797, and include a copy of Form 4797 with the return.
	5	Enter the total amount of any other income (or loss) not reported on lines 1–4, and include a statement describing each income's type and amount with the return.
	6	Enter the sum amount from adding lines 3–5 together.
**Deductions	7	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.
	8	Enter total salaries and wages paid to employees, excluding officers and amounts reported elsewhere on the return.
	9	Enter the cost of repairs and maintenance directly related to the corporation’s trade or business that don’t increase the property's value or extend its life, such as labor and supplies, but exclude capital improvements, which must be depreciated or amortized.
	10	Enter the total amount of business-related debts that became wholly or partially worthless during the tax year, provided the amounts were previously included in income under the cash method of accounting. Use Form 8949 to separately report any nonbusiness debts as a short-term capital loss.
	11	Enter the total amount paid for rent on business property used in a business activity or trade (i.e., don’t deduct rent for a dwelling or unit a shareholder occupied for personal use) and 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.
	12	Enter deductible taxes and licenses paid or incurred during the tax year that aren’t reported elsewhere on the return, excluding federal income taxes, creditable foreign taxes, rental activity taxes, and taxes related to property acquisition or capital improvements.
	13	Report deductible business interest expenses, subject to certain limitations, excluding interest related to rental activities, investment property, shareholder distributions, or the production of designated property.
	14	Enter the total depreciation amount for trade or business assets not reported elsewhere on the return, excluding any CFR Title 26 Section 179 expenses. Complete and attach Form 4562 if the corporation placed property in service during the year or is depreciating listed property.
	15	Enter the total amount lost due to depletion of standing timber in which the corporation has an economic interest, but not for oil or gas properties, as each shareholder figures that individually. Complete and include Form T with the return.
	16	Enter the total amount of deductible advertising expenses the corporation paid or incurred.
	17	Enter the total amount of deductible contributions made to annuity, SEP, SIMPLE IRA, or other deferred compensation plans, excluding IRA contributions reported on Form 1125-A.
	18	Enter the total amount of fringe benefits provided to employees who own 2% or less of the corporation’s stock (e.g., health plans or meals and lodging). Exclude benefits reported elsewhere on the return (i.e., part of a Line 17 pension plan) and those for shareholders owning more than 2% of the corporation’s stock, as those are reported on Form 1125-E.
	19	Enter the total amount of expense paid or incurred to achieve energy efficiency of a commercial building, as calculated on Form 7205.
	20	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.
	21	Enter the sum amount from adding lines 7–20 together.
	22	Enter the amount remaining after subtracting Line 21 from Line 6. Note: This income shouldn’t be used to calculate the excess net passive income or built-in gains taxes for Line 23a.
Tax and Payments	23a	Enter the total amount of excessive new passive income (accumulated earnings and profits, and passive investment income that exceeds 25% of the corporation’s gross receipts) and/or any “last in, first out” (LIFO) inventory recapture income tax paid during the tax year. Include a statement calculating the net passive income tax with the return.
	23b	Enter the amount from Line 23 of Form 1120-S Schedule D.
	23c	Enter the sum total from combining the Line 23a and 23b amounts with any existing totals from Form 4255 (investment credit recapture taxes), Form 8697 (completed long-term contract interest), and Form 8866 (depreciated property). Include a completed copy of each corresponding form (4255, 8697, or 8866) with the return.
	24a	Enter the total amount of estimated tax payments made during the tax year, combined with any overpayment amount(s) from prior tax return(s).
	24b	Enter the total amount of late taxes paid after an extension was approved via Form 7004, and include a copy of the completed form with the return.
	24c	Enter the total amount of tax credits earned from paying federal taxes on certain fuels (e.g., alternative fuels, diesel-water emulsions, etc.) via Form 4136, and include a copy of the completed form with the return.
	24d	Enter the total gross amount of elective payment elections calculated on Form 3800, and include a copy of the completed form with the return.
	24e	Enter the sum total from combining Line 24a – 24d amounts. If the corporation is the beneficiary of a trust and said trust elects to credit its estimated tax payments to its beneficiaries, include the corporation’s portion here as well and enter “T” in the space and record the amount on the dotted line next to the space.
	25	Enter any estimated tax underpayment penalties and select the box if attaching a completed Form 2220.
	26 or 27	Enter the total amount of tax owed (Line 26) or overpayment due to the corporation (Line 27) based on deducting the amount on Line 24z from the sum of lines 23c and 25.
	28	Enter how much of the Line 26 amount should be credited to estimated tax payments for the next tax year or refunded to the corporation.

*Don’t report rental, portfolio, or tax-exempt income on lines 1–5.
**Don’t report on rental activity expenses, portfolio income deductions, nondeductible expenses (e.g., expenses generating tax-exempt income), qualified expenses, or items requiring separate shareholder calculations (e.g., charitable contributions or foreign taxes). Other limitations apply.

1120-S Tax Form Schedule Documents

1120-S instructions also discuss several “Schedule” documents to record and calculate other required amounts that impact the overall S corp tax filing. The provided details ensure the IRS can verify accurate pass-through reporting and help shareholders correctly report their tax obligations.

Schedule B: Identifies certain shareholder and corporate-level information, including stock ownership, elections, and filing qualifications specific to S corporations.
Schedule K: Summarizes the corporation’s total income, deductions, credits, and other items that must be allocated among shareholders.
Schedule L: Provides a balance sheet showing the corporation’s assets, liabilities, and equity as of the beginning and end of the tax year.
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-S.
Schedule M-2: Tracks changes in the corporation’s accumulated adjustments account (AAA), other adjustments account (OAA), and previously taxed income.

How to Submit an S Corp Tax Return

The annual due date for S corp tax return filings is the 15th day of the third month following the close of the business’s tax year.

For most filers, this means an S corp tax return deadline of March 15, unless that date falls on a weekend or federal holiday, in which case it moves to the next business day. In 2025, for example, the 1120-S filing deadline was March 17.

If, however, a business’s tax year is based on a fiscal year (i.e., July 1 – June 30) instead of a calendar year (i.e., January 1 – December 31), the deadline becomes September 15.

Regardless, businesses can also file Form 7004 to request a six-month S corp tax return due date extension, though they must still make their quarterly estimated tax payments on time.

Where to File an S Corp Tax Form

When filing S corp taxes, organizations usually have two choices: electronically or by mail. The IRS, however, strongly encourages electronic submissions due to their speed, security, and lower error rates.

Furthermore, some S corp tax forms must be filed electronically if the business meets certain criteria (e.g., has $10 million or more in assets or files 10 or more information returns). This efile threshold is calculated by aggregating all information returns.

To make an electronic submission, a Form 1120 S corp must first register with the IRS’s Modernized e-File (MeF) program and select an approved e-file provider.

The process for mailed submissions varies based on whether the business uses an IRS-approved private delivery service (PDS) and which IRS address is appropriate for the business’s location and assets.

Streamline Corporate Tax Processes with Paylocity

Given the complexity of Form 1120-S and its associated schedules, many corporations (especially those with multiple shareholders or large assets) choose to partner with a payroll service provider offering robust tax software and tools, 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.

Having integrated, automated payroll and tax tools greatly streamlines the entire filing process, reducing the risk of errors that can delay returns or incur costly penalties. This, in turn, reduces stress, saves time, and fosters more efficient operations.

Request a demo today and see how much easier payroll administration can be.

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