IRS Form 1120 | U.S. Corporation Income Tax Return

Form 1120 is the IRS form that corporations use to file their corporate taxes. At first glance, this one-page form seems simple to fill out. However, in addition to the one page summary, there are also additional schedules, included with Form 1120, that will need to be completed in order to finish the job.

How to Fill-in Form 1120

At the top of the form, the entity defines itself by name, address, and its Employer Identification number (EIN). Also included are the date of incorporation and the company’s total assets.

Lines 1 through 11 are for income. Start with gross receipts in line 1a, and by subtracting returns and cost of goods sold derive gross profit, which is included in Line 3. If dividends need to be included on Line 4, they must have been listed in Schedule C, which is included with Form 1120. After including other factors as instructed, the relevant components are added in to compute the total income in Line 11.

Lines 12 through 26 are for deductions and for expenses. These include salaries and wages, repairs, maintenance and local taxes. Rent, charitable contributions, advertising, and employee benefits must also be listed. If any deductions not listed on Form 1120 are relevant and not noted, attach a separate statement of these, and include the total on Line 26. All the expenses are added together, and they are the total sum of expenses appears in Line 27.

Subtracting total income from total expenses yields the preliminary amount of taxable income in Line 28. At this point, you will again need input from Schedule C of this form, which computes Special Deductions. Net Operating Loss from earlier years, if there were any, must then be added to Special Deductions and the total of the two are listed in Line 29 C.

Taxable Income is entered into Line 30 by subtracting Line 29C from Line 28. Before the final amount of tax that is either owed to the IRS or to be refunded to you can be finally calculated, input from Schedule J of Form 1120 will be needed, so it, too, must have been completed.

Schedule K of Form 1120 must also be included. It is used to record accounting methods, business activity and business activity codes, product or service, and, if appropriate, the EIN of any parent corporation.

Most organizations will also need to fill out Schedule L, which is balance sheet information. Also likely to be necessary is Schedule M-1. The purpose here is to reconcile income or loss per books with income per return.