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How to file Tax Return for S corporations

Posted by Meru Accounting on May 22nd, 2020

How to Tax return for S corp

Every organization pays very close attention to filing its tax returns. When it comes to filing the S corp tax returns, it is very important to know all the important details regarding it. In S corporation, a federal election is made for paying the federal income taxes by the shareholders and not to the company. Generally, federal income taxes are exempted for the S corporation. Here, all the profits, losses, credits, and deductions are given to the shareholders of S corporation’s and reported on tax returns of shareholders. The organization has to totally go through altogether different way for the filing of the tax return for S corporation. These corporations need to have good knowledge regarding it.

Filing of tax returns for S corporation:

01. Tax returns applicable for S corporations

Unlike the double taxation applicable for the C corporation, the S corporation is not obliged to pay double taxation. The tax here is not applicable to the money you withdraw from the Company, instead, they are applicable to pay tax only on the corporate earnings. The taxation is made on the proportionate share of the Company’s earning. Irrespective of the business you do or do not do, you have to file the tax from the first year itself. Some states consider the S corporation differently and different slabs are applicable to them.

02. Which return to choose?

Generally, there is three important taxes payment by S Corporation, they are LIFO recapture tax, excess net passive income, and built-in gains tax. A lot of factors are there while choosing the option for the return. You need to take advice from an expert tax consultant or a financial planner to get a better option. They can suggest a better tax return option for the S Corporation.

03. Filing Threshold

The threshold for each of the S corporation changes as per their income and the type of the category they fall. Filling a proper threshold for tax returns will relieve the organization from a hefty task.

04. Documents required for same

Filing the tax returns for the S Corporation requires a collection of lot of documents. These documents are important for filing the tax returns in a proper way.

Documents list:

  • State Withholding Return
  • EIT withholding return
  • State Unemployment Return
  • FUTA Tax (Form 940)
  • Form 941
  • Form 1120S

05. Checklist for S corporation return

Here are some of the important checklists for S corporation return:

  • Basic Information (EIN, previously filed Form 2553, Prior year tax return, etc.)
  • Shareholder Information (Details of each shareholder, shareholder stock ownership, etc.)
  • Government Forms (1099 forms, Credit certificates, etc.)
  • Financial Records (Trial Balance, Credit card statements, local payroll tax paid, etc.)
  • Asset Records (Details of depreciation schedules, Mileage logs of vehicles, maintenance cost, etc.)

These are some of the general information regarding the tax return for S corporation. Meru Accounting is one of the well-known accounting firms which can give the S corporation tax return service in a better way.

Also See: S Corporation, Tax Returns, Tax Return, S Corporations, Tax, Return, Corporation

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