Form 1120-S: S-Corporation Annual Return
Annual federal income tax return for US S-corporations. Due 15 March for calendar-year filers. 6-month automatic extension via Form 7004 to 15 September. The shareholder's basis, not the amount of cash distributed, decides whether a loss or distribution is allowed. Keep a basis schedule each year.
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Who this applies to
- All US S-corporations (entities that elected S status via Form 2553)
- LLCs taxed as S-corps after Form 2553 election
- Corporations that meet the S election requirements, which include no more than 100 shareholders and only one class of stock
What to file
Form 1120-S with K-1s for each shareholder, P&L, balance sheet, M-1 reconciliation, basis tracking schedules.
How to file
Electronically via authorized e-filers. Send each shareholder their K-1 by 15 March (so they can file personal returns by 15 April).
Payment due
S-corp doesn't pay federal income tax (pass-through). Shareholders pay tax on their K-1 portion via personal Form 1040. The S corporation itself can owe tax in limited cases, such as built-in gains tax and passive income tax, and it must pay any state entity-level tax that applies. Estimated tax rules for corporations apply to those items.
Penalties for missing this deadline
Late filing penalty: $255 per shareholder per month for returns due after 31 December 2025, for up to 12 months. Late or incorrect K-1s carry the information return penalty for each statement, which for 2026 is $60 within 30 days, $130 up to 1 August and $340 after that, with $680 for intentional disregard.
Filing checklist
- Confirm reasonable compensation paid to shareholder-employees as W-2 wages
- Reconcile book to tax (Schedule M-1)
- Update shareholder basis schedules
- Generate K-1 for each shareholder
- Distribute K-1s by 15 March
- File Form 1120-S electronically
Documents you'll need
- Shareholder list with ownership percentages and dates of any change in ownership
- Payroll reports and Forms W-2 showing reasonable compensation for shareholder-employees
- Loan documents and distribution records for basis tracking
- Prior-year Form 1120-S and Schedules K-1
Common mistakes to avoid
- Under-paying owner W-2 wages (the #1 IRS S-corp audit issue)
- Forgetting state S-corp tax (some states tax S-corps directly)
- Missing the K-1 distribution deadline (information return penalties apply to each K-1)
- Not tracking basis: affects future distributions and loss deductions
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