How to file Tax Return for S corporations
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 an 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 from the S corporation. Here, all the profits, losses, credits, and deductions are given to the shareholders of S corporation and reported on the tax returns of shareholders. The organization has to go through an altogether different way for the filing of the tax return for S corporation. Therefore, these corporations need to have expert 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 liable 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. So, they make the taxation on the proportionate share of the Company’s earning. Irrespective of the business you 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 are 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 a lot of documents. These documents are important for filing the tax returns properly.
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 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.)
This is some 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.
