Corporate Tax Returns
The US tax authority Internal Revenue Service requires all corporations to file the tax returns irrespective of whether their business is making profit or loss. The Corporate has to file the tax returns using IRS Form 1120. The IRS requires businesses who have incorporated either as C Corporation or S Corporation to report corporate tax returns using Form 1120 or Form 1120-S (S corporation).
C Corporation pays tax on profit after making deductions if any. An S corporation has two options either to be taxed as a corporation or as a partnership business. For tax returns, a partnership business is treated as a “pass-through entry” because the profits at the end flow to the owner and collect tax on the owner’s income.
When are corporate tax returns due?
The deadline for a corporate tax return is March 15 of each year. However, a corporation can get six-month extensions via a request to the IRS. However, owing to the pandemic COVID 19, the IRS has extended the tax filing deadline to July 15, 2020, for individuals and businesses.
Corporations with assets of more than 10 million have to file their return online. An accountant can also e-file the tax returns on behalf of the corporation. You can hire Meru Accounting tax services to assist you in filing corporate tax returns. Our CPAs have years of experience in filing federal taxes.
What information does a corporate tax return include?
The corporate tax return has detailed information about the corporation’s profit and expense to find out the tax liability payable to the IRS. The tax returns have several schedules that report information about the
1. COGS (cost of goods sold)
2. office compensation
3. accounting method
4. business category
5. dividends, deduction
6. reconciliation of income and loss
7. NAICS classification number.
8. Balance sheet.
9. Necessary information and documents for filing tax returns
The necessary information to file a corporate tax return is name and address, date of incorporation, employee ID number, and total assets. The corporate finance officer is required to provide the following details related to the corporate income:
1. Dividend.
2. Interest.
3. Rents.
4. Royalties.
5. Capital Gains.
6. Gross receipts
7. COGS
Deductible expenses on corporate tax returns
A corporation can reduce taxable income by certain business expenses. All the expenses required for business operation are fully deductible. Investments and real estate purchases intended to generate business income are also allowed as deductions. Following is the comprehensive list of deductible expenses:
1. Salaries.
2. Office compensation.
3. Tax preparation fees.
4. Interest payments.
5. Depreciation.
6. Charitable contribution.
7. Sales tax
8. Advertising cost.
9. Fuel taxes.
10. Legal service
11. Bookkeeping
12. Employee benefit scheme.
13. Pension and profit-sharing schemes.
14. Other miscellaneous deductions.
15. Advantages of Corporate tax returns
Many businesses choose corporations as their legal business structure owing to the advantage of paying tax on profits rather than on income. Corporate tax returns allow the deduction of medical insurance for families, fringe benefits, retirement plans, and tax-deferred trusts. The CTR also allows a deduction for losses in full. The profit earned by a corporation is left within the corporation for tax planning and potential future tax merits.
Get started with your corporate tax returns with Meru Accounting. Get cloud service from us while maintaining the new normal of social distancing.
