S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level.
To qualify for S corporation status, the corporation must meet the following requirements:
- Be a domestic corporation
- Have only allowable shareholders
- May be individuals, certain trusts, and estates and
- May not be partnerships, corporations or non-resident alien shareholders
- Have no more than 100 shareholders
- Have only one class of stock
- Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).
In order to become an S corporation, the corporation must submit Form 2553, Election by a Small Business Corporation signed by all the shareholders. See the Instructions for Form 2553PDF for all required information and to determine where to file the form.
Chart 1 - S Corporation
If you are an S corporation then you may be liable for...
Separate Instructions...Income Tax1120-S
1120-S (Sch. K-1)PDFInstructions for Form 1120-SPDF
Instructions for Form 1120-S Sch. K-1PDFEstimated tax1120-W (corporation only)Instructions for Form 1120-WPDF
- Social security and Medicare taxes and income tax withholding
- Federal unemployment (FUTA) tax
- Depositing employment taxes
941or 943(for farm employees)
Instructions for Form 941, Employers QUARTERLY Federal Tax ReturnPDF
Instructions for Form 943, Employers Annual Federal Tax Return for Agricultural EmployeesPDF
Instructions for Form 940, Employers Annual Federal Unemployment (FUTA) Tax ReturnPDFExcise TaxesRefer to the Excise Tax webpage
Chart 2 - S Corporation Shareholders
If you are an S corporation shareholder then you may be liable for...
Separate Instructions...Income Tax1040 or 1040-SR and Schedule Eand other forms referenced on the shareholder's Schedule K-1Instructions for Schedule E (Form 1040 and 1040-SR) Supplemental Income and LossPDFEstimated tax1040-ES