The phrase “S-Corp” may be familiar to you if you run a small company. But what exactly is an S-Corp and how does it differ from other types of corporations?
An S-Corp, or a subchapter S corporation, is a special tax designation that allows a corporation to pass its income and losses through to its shareholders, who then report them on their personal tax returns. This way, your S-Corp avoids the double taxation that applies to regular corporations, which pay corporate income tax and then distribute dividends to shareholders who pay individual income tax.
Another benefit of electing S-Corp status is that it can reduce the self-employment taxes that apply to sole proprietors and partners, who pay both the employer and employee portions of Social Security and Medicare taxes.
This article provides you with a comprehensive guide on the federal tax filing dates for S-Corps, so you can stay on top of your tax obligations and avoid penalties.
S-Corp deadlines you need to know:
- S-Corp Income Tax Return Deadline
- Quarterly Payroll Tax Return Deadlines
- Annual Federal Unemployment Tax Return Deadline
Ready? Let’s dive in.
1. S-Corp Income Tax Return Deadline
As an S-Corp owner, you need to be aware of the federal income tax filing deadline for your business. Unlike C corporations, which pay corporate income tax on their profits, S corporations are pass-through entities that do not pay any federal income tax at the corporate level. Instead, they file an informational income tax return each year using Form 1120S.
This form shows the S-Corp’s income, deductions, credits, and distributions to shareholders. The shareholders then report their share of the S-Corp’s taxable net income on their personal tax returns and pay the appropriate tax rate.
The deadline for filing Form 1120S is the 15th day of the third month following the end of the tax year, usually March 15. For example, if your S-Corp’s tax year ends on December 31, 2023, you must file Form 1120S by March 15, 2024. However, if your S-Corp has a fiscal year that does not end on December 31, the deadline is the 15th day of the third month after the close of the fiscal year.
Along with Form 1120S, you must also attach a Schedule K-1 for each shareholder of your S-Corp. A Schedule K-1 shows the shareholder’s share of the S-Corp’s taxable net income, as well as their share of any items that affect their tax liability, such as deductions, credits, losses, and distributions.
The Schedule K-1 also indicates whether the shareholder is a domestic or foreign person and whether they are an individual, trust, estate, partnership, corporation, or tax-exempt entity. Provide a copy of the Schedule K-1 to each shareholder by the due date of Form 1120S, and keep a copy for your records. The shareholders must use the information on Schedule K-1 to report their share of the S-Corp’s income and deductions on their personal tax returns.
If you need more time to file Form 1120S, you can request an extension of time to file by submitting Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns. This form allows you to extend the filing deadline for Form 1120S by six months, giving you until September 15 (or the 15th day of the ninth month after the close of the fiscal year) to file your return.
However, you must file Form 7004 by the original due date of Form 1120S, and you must pay any taxes due by that date. Filing an extension does not extend the time to pay your taxes, only the time to file your return. If you fail to file Form 1120S or pay your taxes on time, you may face penalties and interest charges from the IRS.
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2. Quarterly Payroll Tax Return Deadlines
Another federal tax filing deadline you need to comply with as an S-Corp owner is the quarterly payroll tax return deadline. If your S-Corp pays wages to employees, you are responsible for withholding and remitting federal income tax, Social Security tax, and Medicare tax from their paychecks.
These taxes are collectively known as employment taxes or payroll taxes. You must also pay the employer’s share of Social Security and Medicare taxes, which is equal to the employee’s share. You must file a quarterly payroll tax return using Form 941 for each quarter, usually by January 31, April 30, July 31, and October 31. Form 941 shows the total wages paid, the taxes withheld, and the taxes owed or paid for the quarter.
You must also report any adjustments to your payroll taxes, such as sick pay, tips, group-term life insurance, or COBRA premiums. Filing Form 941 on time and paying your payroll taxes correctly can help you avoid penalties and interest charges from the IRS. You can also claim a deduction for the payroll taxes paid on your business income tax return.
You must pay your payroll taxes either monthly or semiweekly, depending on your tax liability. If your total tax liability for the current or prior quarter is $50,000 or less, you are a monthly depositor. If your total tax liability for the current or prior quarter is more than $50,000, you are a semiweekly depositor. Monthly depositors must deposit by the 15th day of the following month.
Semiweekly depositors must deposit by the following Wednesday or Friday, depending on the pay date. If the deposit due date falls on a weekend or holiday, the deposit is due on the next business day.
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3. Annual Federal Unemployment Tax Return Deadline
In addition to the payroll taxes, S-Corps that pay wages to employees are also subject to the federal unemployment tax (FUTA), which helps fund unemployment benefits for workers who lose their jobs. It’s only employers that pay The FUTA tax, not the employee.
The deadline for filing Form 940 is January 31 of each year. However, if January 31 falls on a weekend or holiday, the deadline is the next business day. For example, if January 31, 2024, is a Saturday, the deadline is February 2, 2024, which is the following Monday.
Form 940 shows the total paid wages, the FUTA tax rate, and the owed or paid FUTA tax for the year. The FUTA tax rate is 6% of the first $7,000 of wages paid to each employee per year. However, most S-Corps can reduce their FUTA tax liability by taking credit for the state unemployment tax (SUTA) paid, if applicable. The SUTA credit can be up to 5.4% of the taxable wages, depending on the state’s unemployment insurance system and the S-Corp’s experience rating. If the S-Corp qualifies for the maximum SUTA credit, the effective FUTA tax rate is 0.6% of the taxable wages.
The S-Corp must pay the FUTA tax either quarterly or annually, depending on the tax liability. If the FUTA tax liability is more than $500 for any quarter, the S-Corp must make a quarterly deposit by the last day of the month following the end of the quarter.
If the FUTA tax liability is $500 or less for any quarter, the S-Corp can carry it over to the next quarter until the cumulative liability exceeds $500, then deposit by the last day of the month following that quarter. If the FUTA tax liability is $500 or less for the entire year, the S-Corp can pay the tax with the annual Form 940 filing.
Filing Form 940 on time and paying the FUTA tax correctly can help the S-Corp avoid penalties and interest charges from the IRS. The S-Corp can also claim a deduction for the paid FUTA tax on their business income tax return.
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Recap
Meeting the federal tax filing deadlines and requirements for S-Corps is crucial for avoiding penalties and interest charges from the IRS and maintaining the S-Corp status, so pay attention to the dates: For S-Corp income tax return, its deadline is March 15 or the 15th day of the third month after the end of the fiscal year, using Form 1120S.
Quarterly payroll tax return deadlines are set for January 31, April 30, July 31, and October 31 using Form 941, while Annual federal unemployment tax return deadline is January 31 using Form 940.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. . For comprehensive tax, legal or financial advice, always contact a qualified professional in your area. S’witty Kiwi assumes no liability for actions taken in reliance upon the information contained herein.
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