CORPORATE TAX RETUIRN

U.S. Corporate Tax Summary

🏛️ What is Corporate Tax?

Corporate tax is a federal tax imposed by the Internal Revenue Service (IRS) on the profits (net income) earned by corporations in the U.S.

🧾 Who Must Pay?

✅ All C Corporations
✅ Foreign corporations earning U.S. income
✅ Domestic corporations with income from U.S. or abroad

(S Corporations and LLCs generally don’t pay corporate tax directly — they are pass-through entities.)

💰 Tax Rate

  • Flat 21% (Federal rate since 2018)
  • State corporate tax may also apply (ranges from 1% to 12% depending on the state)

📄 Main Corporate Tax Return Form

FormPurpose
Form 1120U.S. Corporation Income Tax Return — required for all C Corporations to report income, deductions, and tax owed

📅 Filing Deadlines

ActionDue Date
File Form 1120April 15 (for calendar year corporations)
File Form 7004 (for extension)Also by April 15 — gets 6 more months

✅ Allowable Deductions

Corporations can subtract these from their gross income to reduce tax:

  • Employee salaries
  • Rent and utilities
  • Business travel and supplies
  • Depreciation on assets
  • Insurance and interest expenses
  • Advertising and marketing

🎁 Tax Credits

Corporations may claim:

  • R&D Credit
  • Foreign Tax Credit
  • Energy Efficiency Credits
  • General Business Credit

🧾 Other Related Forms (If Required)

FormPurpose
Form 941For reporting employee payroll taxes (quarterly)
Form 1125-ACost of Goods Sold (COGS)
Form 1125-ECompensation of officers

⚠️ Penalties

  • Late Filing: 5% per month (max 25%)
  • Late Payment: 0.5% per month interest
  • Underpayment or misreporting: May lead to audits or IRS penalties

entities are liable to file corporate tax returns

✅ 1. C Corporations

Who:
Any domestic corporation (registered in the U.S.) that is not specifically treated as a pass-through entity like an S-corp or LLC taxed as a partnership.

Must file:

  • Form 1120 – U.S. Corporation Income Tax Return
  • Even if the corporation doesn’t earn any income, it must file annually.

✅ 2. S Corporations

Who:
A domestic corporation that has elected S Corporation status by filing Form 2553 and meets IRS eligibility rules (e.g., ≤100 shareholders, all U.S. individuals).

Must file:

  • Form 1120-S – U.S. Income Tax Return for an S Corporation
  • Each shareholder then reports their share of income on their personal tax return.

✅ 3. Foreign Corporations

Who:
Any non-U.S. company that:

  • Has income effectively connected with a U.S. trade or business, OR
  • Owns U.S. real property, has a U.S. office/agent, or earns U.S.-source income (e.g., interest, royalties).

Must file:

  • Form 1120-F – U.S. Income Tax Return of a Foreign Corporation

🕒 Filing Deadlines:

  • C Corps: April 15 (or 15th day of the 4th month after fiscal year-end)
  • S Corps: March 15 (15th day of the 3rd month after fiscal year-end)
  • Foreign Corps: Varies, but generally June 15 if no U.S. office

Let us update you on the latest tax slab introduced by the government of India. You can see in the table below and find out your earning bracket and your tax eligibility.

Which Corporation form do you need to fill?

🏢 1. C Corporation (Form 1120)

  • Separate legal entity from its owners.
  • Pays corporate income tax at a flat 21% federal rate.
  • Subject to double taxation:
    • First: Corporation pays tax on its profits.
    • Second: Shareholders pay tax on dividends received.
  • Form Used: Form 1120

✅ Best for: Large businesses, companies planning to raise capital or go public.

🧾 2. S Corporation (Form 1120-S)

  • Pass-through entity: No corporate tax at entity level.
  • Profits and losses “pass through” to shareholders’ personal tax returns.
  • Must meet specific IRS requirements (≤100 shareholders, U.S. citizens/residents, etc.).
  • Form Used: Form 1120-S
  • ✅ Best for: Small to medium-sized businesses wanting liability protection with no double taxation.

🧾 3. Foreign Corporation (Form 1120-F)

  • Corporation incorporated outside the U.S. but doing business in the U.S.
  • Pays U.S. tax only on U.S.-sourced income.
  • May be required to file if it has a U.S. branch, office, or dependent agent.
  • Form Used: Form 1120-F

✅ Best for: Global companies with U.S. presence or revenue.

Documents Required for Corporate TAX

  • 1. Business Identification Documents
  • Employer Identification Number (EIN)
  • Articles of Incorporation / Organization
  • State registration certificate
  • Shareholder or partner information (including ownership percentage)
  • 2. Financial Statements
  • Profit and Loss Statement (P&L) – showing revenues, costs, expenses
  • Balance Sheet – showing assets, liabilities, and equity
  • Statement of Cash Flows (optional, but helpful)
  • General ledger – complete record of transactions
  • 3. Income Records
  • Invoices issued to clients/customers
  • Bank statements showing all income received
  • Interest, dividends, royalties earned (if any)
  • Other income like asset sales, rental income, etc.
  • 4. Expense Records
  • Receipts and invoices for business expenses
  • Payroll records (W-2s, W-3s, 941s)
  • Rent/Lease agreements
  • Utility bills, travel expenses, insurance details
  • Depreciation schedules for equipment or property
  • 5. Tax Payments & Credits
  • Estimated tax payment records (Form 1120-W)
  • Carryover losses from prior years
  • Credits claimed (e.g., R&D Credit, Foreign Tax Credit)
  • 6. Other Tax Forms/Documents
  • Form 941/944 – Employer’s Quarterly/Annual Federal Tax Return
  • Form 1099s – if you hired contractors
  • Prior year tax returns (Form 1120, 1120-S, etc.)
  • Form 5472 – if a foreign shareholder owns 25%+ of a U.S. corp
  • 📅 Deadline Reminders
  • C Corporations (Form 1120): April 15 (calendar year) or 15th day of 4th month after year-end
  • S Corporations (Form 1120-S): March 15
  • Foreign Corporations (Form 1120-F): June 15 (with no U.S. office)
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