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What Are The Deadlines for Filing Corporate Taxes?

What Are The Deadlines for Filing Corporate Taxes?

Corporations are characterized by law as a juridical entity, which authorized to act as a single entity. Legal personality of a corporation is separate and distinct from its owners. It is authorized to enter a contract, apply for a loan, to sue and be sued, recruit workers, own properties and pay taxes. Corporations are subject to taxes depending on the jurisdictional requirements laid down by authorities. Corporate taxes are taxes imposed on the net profit of corporations. It is calculated by deducting expenses from the revenues, and tax rates are applied.

Rules on corporate taxations differ in every country around the world. Legislative body must enact laws to regulate and apply the legal obligations of the business owes to the government. It is imposed on all domestics and foreign corporations having income or activities within the jurisdiction. In the United State, corporate tax is flat at 21% due to the passage of Tax Cuts and Jobs Act.

Corporate Business Structures

Corporations are mandated by law to file tax returns every year; they must make a quarterly estimated tax payment. United States legislators give for classifications of corporations according to its business structure. When starting a company, a business type is one of the considerations. LLC or Limited Liability Company is a specific form of business where it combines the characteristics of a partnership and corporation or sole proprietorship depending on the number of owners. The limited liability feature is like that of a corporation and with a partnership that the profits of the company “pass-through” to owners tax return. It is well-known for it affords greater protection to the assets of the members.

C Corporation

Corporations have different types: C Corporation and S Corporation. Its distinction is also used as to the type of taxation will be applicable to such entity. C corporation is a traditional type, which is treated as a separate taxable entity by the IRS. It is known for having “Double Taxation”, they are taxed at a corporate level and then taxed at the personal income level when dividends are distributed to the shareholders. C corporation must pay estimated corporate income tax and must be made quarterly throughout the year. Failure to pay on time can be subject to interest and penalties if not paid fully. Corporate tax returns are filed on Form 1120. Thereafter, shareholders must report dividends received and personal income tax rate shall apply.

The corporation must file its income tax return on the 15th day of April after the end of the taxable year. If the deadline falls on a holiday, Saturday or Sunday it must be filed on the next business day. A six months extension can be requested by filing Form 1120 and it will be due on October 15th. Failing to file tax returns has a penalty, a percentage of the amount unpaid. Even if at a certain year the corporation was not profitable and no taxes incurred, filing is still necessary otherwise will result in a late-filing penalty. When the taxable income of the corporation is in negative, it still needs to be reported on Form 1120.

S Corporation

S Corporation income and losses of the company are divided among the shareholders and pass-through at personal income tax level. In filing for tax returns, owners are required to file their income tax returns on the 15th day of March after the end of the taxable year. In case the deadline to file corporate income tax was not met, a six-month extension can be requested from the Internal Revenue Service by filing Form 7004.

  • It must file Form 1120S and must present the corporation's income, expenses and losses. Upon failure to file or ask for an extension, IRS will impose a minimum penalty of $195 for each month delayed multiplied by the number of shareholders.
  • You must also file Form K-1 for each shareholder to report their share of the corporate income or losses.
  • S corporation has a responsibility to file an informational income tax each year.
  • If the corporation pays wages it is required to file Form 941 quarterly to report the total amount of withholding federal income tax as well as Social Security and Medicare taxes from their paychecks. It is due four times in a year: January 31, April 30, July 31, and October 31. When filing fall beyond the prescribed period with unpaid tax balance, the penalty shall be 5% up to 25% of the balance taxes for each month the tax is late.
  • Every January 31, corporation must file an Annual Federal Unemployment Tax Return on Form 940 if it pays wages of $1,500 or more. Purposely to report the number of wages the S corporation owes unemployment taxes. If failed to comply, 5% to 25% penalty for each month late shall be imposed.

Taxation is a legal obligation, running away with its results in severe and heavier burden. It must be observed and complied with in good faith.

Fletcher Accounting and Tax Service Inc.
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