Corporate Tax Filing Basics

Corporate tax filing is the process of reporting the profits and losses of a business to federal, state, and local governments. As a result of changes in the tax code and complex rules, corporate taxes are constantly changing, making it difficult for businesses to keep up. In addition, it is important for companies to know how to file taxes correctly and to understand the penalties for late filings.

There are two main types of corporation for tax purposes in the United States: C corporations and S corporations. C corporations are subject to double taxation, which means that they pay tax at the entity level on their profit and then again at the shareholder level when dividends are distributed to shareholders. On the other hand, S corporations have a pass-through tax structure that eliminates the need for double taxation. This type of structure is common among smaller businesses and sole proprietorships.

The IRS requires all corporations to file a tax return each year. This is typically done using the form 1120. The tax return includes information such as the company’s profit, loss, and expenses. It also contains details of the corporation’s directors and officers. The return must be filed by the company’s principal place of business in its tax jurisdiction or its registered agent. The IRS also requires the company to provide statements of compensation and amounts withheld from employees’ paychecks.

Whether a company is an S corporation or C corporation, it must report its income and pay tax on those profits in whichever state it has taxable activity. The filing process can be complicated for companies that have multiple locations in different states. For this reason, it is critical that companies have the right tax professionals to ensure they are submitting accurate and complete returns.

The deadline for filing a corporate tax return is typically the 15th day of the fourth month after the close of the corporation’s tax year. The due date may be extended by filing a request for extension in the form 1120-ES. In addition to the corporate tax return, a taxpayer must also submit any information returns required by the IRS.

Most states require corporations to file business tax returns. Usually, these returns are due one month later than the federal tax return. However, the states are starting to change the due dates of the state returns to align with those of the federal return.

Depending on the business’s structure, there are certain expenses that can be deducted from a corporation’s taxable income. These include a variety of employee benefits, such as medical insurance and tuition reimbursement. The company can also deduct interest payments, bad debts, sales taxes, fuel taxes, and excise taxes.

A corporation can choose to file its returns electronically or by paper. The Electronic Return Originator Program (eROP) is a new program from the IRS that allows companies to electronically file their federal tax returns. EROP is available for C and S corporations that meet specific requirements, including being an authorized IRS e-file provider or using software approved by the IRS.