Corporate Tax Returns

The United States IRS requires that all corporations file tax returns annually, regardless of whether or not the company was profitable during the tax year with form number 1120. Corporate tax returns are needed for businesses who have incorporated as either C-corporations or S-corporations. Many business owners choose these legal business structures because it may be advantageous for the business to pay tax on profits instead of the owner.

C-corporations pay tax on all profits, minus any deductions. S-corporations have the option to choose to be taxed as a corporation or as a partnership where the business is treated as a “pass-through entity” and the profits are passed on to the owner and taxes collected via his or her personal tax returns.

Corporate tax returns are typically due on March 15th each year, however, corporations may request a six-month extension. Any corporations with more than $10 million in assets must file their returns online. An accountant is able to file online on behalf of the business, but the paperwork must be filed electronically. Corporations are able to make installment payments in April, June, September and December.

What Information Is Included on Corporate Tax Returns?

Corporate tax returns detail the company’s profits and expenses to determine the amount of tax the company owes to the US government. The return comprises of several schedules that detail information such as the costs of goods sold, dividends and deductions, officer compensation, details about the accounting method used, business type, NAICS classification number, balance sheets, and the reconciliation of income and loss.

Information and Documents Necessary for Corporate Tax Returns

The information necessary to file corporate tax returns includes the name, address, employer ID number, date of incorporation, and the total assets. The corporate financial officer will need to supply details about the corporate income including:

  • Gross receipts
  • Cost of goods sold
  • Dividends
  • Interest
  • Rents
  • Royalties
  • Capital gains

What Expenses Can I Deduct on Corporate Tax Returns?

Corporations are able to claim many tax deductible expenses against income. The financial officers of the corporation should be tracking these details throughout the year and be able to supply full documentation in the case of an audit. The deductible expenses include:

  • Officer compensation
  • Other salaries
  • Repairs and maintenance
  • Rents
  • Taxes and licenses
  • Interest expenses
  • Charitable contributions
  • Depreciation
  • Advertising
  • Pensions and profit sharing plans
  • Employee benefit programs
  • Domestic production activities
  • Other miscellaneous deductions

Special rules for foreign investors

Corporations owned by non-US residents must file corporate returns. Non-US residents should seek advice from an international tax expert when opening a business in the US as well as when filing taxes. Under US tax law, non-residents may own shares in a C-corporation, which may be subject to double taxation of profits at the corporate level and at the personal level for dividends received by shareholders. Alternatively, LLCs will pass on all of the profit to the owner who will then need to file personal tax returns with the IRS.

The United States has some of the strongest global markets, but some argue that it also levies the highest corporate tax rates among developed nations. There is debate on whether or not the US corporate tax rate is actually higher, especially when all of the deductions and credits are taken into account.

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