What Is Form 1120?

One of the principal forms of doing business in the United States is the corporation.  Many corporations file their Federal income tax returns on Form 1120, ‘U.S. Corporation Income Tax Return.’

This article discusses some of the key points to know concerning Form 1120 for US Expats.

Who Must File Form 1120?

Typically, all domestic corporations must file Form 1120.   

The US generally considers a corporation domestic if it was created or organized in the United States or under the law of the United States or of any state in the United States.

Form 1120 is not just for corporations but also sole proprietorships and LLCs that are taxed as a corporation. The form is used to report income and expenses, calculate taxes due and pay them to the IRS. You may have heard this form referred to as the US Corporation Income Tax Return (Form 1120). Some key exceptions to the filing of Form 1120 are as follows: 

If you have a domestic corporation, please note that your corporation generally is required to file Form 1120, even if you are a US citizen who moves abroad and becomes an expat.

• Foreign corporations file Form 1120-F;
• Life insurance company corporations file Form 1120-L;
• Property and casualty insurance company corporations file Form 1120-PC;
• Real estate investment trust corporations file Form 1120-REIT;
• Regulated investment company corporations file Form 1120-RIC; and
• S corporations file Form 1120-S.

What Do You Report on Form 1120?

Form 1120 is used to report the income, gains, losses, deductions, and credits of a corporation and then figure out the income tax liability of the corporation.

The form asks for detailed information about your business’s assets and liabilities, as well as your gross receipts and expenses. The form also asks for information about any eligible dividends that you paid out to shareholders during the year. 

If you’re using a calendar year as your business’ tax year, then you’ll also need to report any adjustments made during the year that change the original total amount of money owed or refunded by the IRS. 

Form 1120 – Page 1

At the top of page 1, the corporation must answer certain factual questions, including concerning:

• The time period covered by Form 1120 (generally the calendar year, unless if a different time period is designated);
• The name, address, employer identification number, and total assets of the corporation (including whether the corporation had total assets of $10 million or more on the last day of its tax year);
• The date the corporation was incorporated;
• Whether the corporation is filing a certain type of consolidated return;
• Whether the corporation is a personal holding company or a personal service corporation;
• Whether Form 1120 is an initial or final return; and
• Whether Form 1120 reflects a name change or address change.

The corporation also must report on page 1:

• Its income, including from gross receipts, less returns and allowances and cost of goods sold, plus ‘dividends and inclusions’, interest, rents, royalties, capital gain, and other gains or income; and
• Its deductions, including from compensation of officers, salaries and wages, repairs and maintenance, bad debts, rents, taxes and licenses, interest, charitable contributions, depreciation, depletion, advertising, pension, and profit-sharing plans, employee benefit programs, net operating loss, “special deductions” (see below), and other deductions.

Based on this income and these deductions, the corporation then determines on page 1 its taxable income,  ‘total tax,’ and ‘total payments and credits,’ whether there is an amount owed or an overpayment, and certain estimated tax issues.

At the bottom of page 1, Form 1120 must be signed and dated.

Form 1120 – Page 2

On page 2 (which has the heading, ‘Schedule C Dividends, Inclusions, and Special Deductions’), the corporation must report the ‘dividends and inclusions’ and the ‘special deductions’ that are referenced on page 1.   

Form 1120 – Page 3

On page 3 (which has the heading, ‘Schedule J Tax Computation and Payment’), the corporation determines the ‘total tax’ that is referenced on page 1 by:

• Computing an amount of ‘Income Tax,’ generally equal to taxable income multiplied by 21%;
• Subtracting certain credits, including the foreign tax credit, the general business credit, and the credit for prior year minimum tax; and
• Adding certain items, including the personal holding company tax and the recapture of investment credit.

The corporation also on page 3 determines the ‘total payments and credits’ that are referenced on page 1.

If the ‘total payments and credit’ are less than the sum of ‘total tax’ plus any applicable estimated tax penalty, the corporation will owe a tax liability.  Alternatively, if the total payments and credit are more than the sum of ‘total tax’ plus any applicable estimated tax penalty, the corporation can receive a refund of the excess amount or credit it to future estimated tax liability.

Form 1120 – Pages 4 and 5

On pages 4 and 5 (Schedule K Other Information), the corporation must answer 26 additional factual questions, including concerning:

• The accounting method used by the corporation;
• Whether the corporation is a subsidiary in an affiliated group or a parent-subsidiary controlled group;
• Whether one foreign person owns, directly or indirectly, at least 25% of the total voting power of all classes of the corporation’s stock entitled to vote or at least 25% of the total value of all classes of the corporation’s stock;
• The amount of tax-exempt interest received or accrued by the corporation;
• Whether the corporation’s total receipts and total assets are less than $250,000;
• Whether the corporation made any payments that would require it to file Form(s) 1099;
• Whether the corporation had an 80%-or-more change in ownership, including a change due to redemption of its own stock; and
• Whether the corporation disposed of more than 65% (by value) of its assets in a taxable, non-taxable, or tax-deferred transaction.

Form 1120 – Page 6

Page 6 consists of three financial Schedules:

• Schedule L Balance Sheets per Books
• Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return
•  Schedule M-2 Analysis of Unappropriated Retained Earnings per Books

The corporation does not have to complete Schedules L and M if its total receipts and total assets are less than $250,000.

Who Signs Form 1120?

As the corporation is an entity and not a natural person, someone who is authorized to act on behalf of the corporation must sign and date Form 1120. This can be the president, vice president, treasurer, assistant treasurer, chief accounting officer of the corporation, or any other corporate officer authorized to sign Form 1120. 

If a ‘paid preparer’ is used for Form 1120, the preparer must include identifying information and sign and date the Form 1120 at the bottom of page 1.

Where Is Form 1120 Filed?

Form 1120 can generally be filed electronically (“e-filing”).  If there is a balance due, the corporation can authorize an electronic funds withdrawal while e-filing.

Form 1120 can also be filed by mail.  Form 1120 is mailed to an address determined by where the corporation’s principal business, office, or agency is located and the amount of the corporation’s total assets.

When Is Form 1120 Due?

A corporation generally must file its Form 1120 by the 15th day of its fourth month after the end of its tax year.  Thus, a corporation with a calendar tax year generally must file its Form 1120 by April 15 of the following calendar year. (April 18th in, 2023)

A new corporation filing a short-period Form 1120 must generally file by the 15th day of the fourth month after the short period ends.  A corporation that has dissolved must generally file its Form 1120 by the 15th day of the fourth month after the date it dissolved.

However, a corporation with a fiscal tax year ending June 30 must file its Form 1120 by the 15th day of the third month after the end of its tax year.  A corporation with a short tax year ending anytime in June will be treated as if the short year ended on June 30 and must file its Form 1120 by the 15th day of the third month after the end of its tax year.

If the due date of the Form 1120 falls on a Saturday, Sunday, or legal holiday, the corporation can file its Form 1120 on the next business day.

Instructions for Form 1120

A critical resource to help persons prepare Form 1120 is “Instructions for Form 1120”.  Produced by the Internal Revenue Service, “Instructions for Form 1120” is a 31-page document that provides specific details on how to prepare and file Form 1120. 

 Have Questions Regarding Form 1120? We Are Here to Help! 

At Greenback Expat Tax Services, we specialize in helping expats manage their US tax obligations.  Among our many services, we can assist expats with filing Form 1120. 

If you’re ready to be matched with a Greenback accountant, click the get started button below. For general questions on expat taxes or working with Greenback, contact our Customer Champions.