If you ask 10 Americans when taxes are due, all of them are going to say April. Some may even be able to tell you that National Tax Day falls on April 15. Of course, in the accounting world, we know this date all too well. However, we also know that April 15 is far from the be-all, end-all deadline when it comes to tax season. There are dozens of deadlines on the tax calendar, and one of the most important is the date that Form 1120s is due. This year, that deadline falls on March 16, 2020.
What are 1120s?
In the simplest terms, Form 1120 is for corporations what Form 1040 is for individuals: the single most important tax document they file. The 1120 is, in the words of the IRS, for domestic corporations to “report their income gains, losses, deductions, [and] credits” and “figure their income tax liability.” This form can also be filed for any business, for example an LLC, that wishes to be taxed as a corporation. Form 1120-S is the equivalent document for s corporations, businesses that pass income directly to shareholders to avoid double taxation.
In the past, corporations of different sizes were taxed at varying rates. That is no longer the case after the passage of the Tax Cuts and Jobs Act of 2017. Today, the corporate tax rate is capped at 21 percent, and businesses of all sizes are taxed at the rate.
When are 1120s due?
According to The Balance, “Form 1120s must be filed by the 15th day of the third month after the end of your corporation’s tax year.” While that may sound abstract, what it means in effect is that businesses whose tax year ends on December 31, normally would have to file by March 15. Since March 15 falls on a Sunday this year, the deadline has been extended to March 16, 2020. Both standard corporations and s corps can use Form 7004 to request a six-month deadline extension, elongating the deadline to October 15.
How to prepare for filling day
A corporation needs all of the same information as an individual when it comes time to file a return. The tax preparer should have all income data, deductible expenses, donations to charity, and other relevant financial information ready at hand when they sit down to prepare the return. While corporate taxes are not different in kind from individual filings, they are often different in scale and complexity. Corporations, almost as a matter of course, will be dealing with more sources of income, more expenses, more everything than a single filer. As such, diligent preparation is essential in order to ensure a successful and hassle-free tax season.
How AccountingSuite can help
Centralized, feature-rich accounting software is essential for a streamlined tax process. No business owner wants to have to wrangle an endless paper trail in order to untangle their finances, and no tax preparer wants to begin their tax with a disorganized shoebox of receipts. With AccountingSuite, not only does all of a business’s data live in one place, but you can also generate reports to give you valuable snapshots of relevant information. And because AccountingSuite is cloud-based, you can share information easily no matter where you are or what device you are using. The pace of modern business doesn’t have time for antiquated tax accounting methods. No matter the deadlines, AccountingSuite can help keep businesses on track for a smooth tax season. Click here for your free trial.