S corporations are corporations that elect to pass corporate income, losses, deductions and credit 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.

To qualify for S corporation status, the corporation must meet the following requirements:

  • Be a domestic corporation
  • Have only allowable shareholders
    • including individuals, certain trust, and estates and
    • may not include partnerships, corporations or non-resident alien shareholders
  • Have no more than 100 shareholders
  • Have 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 (PDF) signed by all the shareholders.

Filing Requirements:

Chart 1 – S Corporation

If you are an S corporation then you may be liable for… Use Form…
Income Tax 1120S (PDF) (Instructions for Form 1120S (PDF))
1120S Sch. K-1 (PDF) ( Instructions for Form 1120S Sch. K-1 (PDF))
Estimated tax 1120-W (PDF) (corporation only) and 8109
Employment taxes:

  • Social security and Medicare taxes and income tax withholding
  • Federal unemployment (FUTA) tax
  • Depositing employment taxes
941 (PDF) ( 943 (PDF) for farm employees)940 (PDF)
8109
Excise Taxes Refer to the Excise Tax web page

Chart 2 – S Corporation Shareholders

If you are an S corporation
shareholder then you may be liable for…
Use Form…
Income Tax 1040 and Schedule E (PDF)
Estimated tax 1040-ES (PDF)

References/Related Topics

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