A corporate tax return reports a company’s income gains or losses during a tax year. Corporations file tax returns with the state and federal government, and the deadline is set by the government. The information used to complete a corporate tax return can be found on a company’s Balance Sheet and Profit and Loss Report.
A corporate tax return is a form filed by a corporation that reports a company’s income gains or losses during a tax year. In the United States, corporations generally file tax returns with the state in which the business operates, as well as with the federal government’s Internal Revenue Service (IRS). While the rules and jurisdictions for states and other countries vary, the IRS requires a corporation to complete Form 1120 (or 1120S for an S corporation) along with supporting schedules.
Tax returns filed by corporations include all income and deductions, similar to a simple tax return filed by a citizen. The first section lists all income and the second lists all expenses, losses, and deductions. Other parts of the form, such as Schedule A or Schedule C, must be completed along with the main form.
The deadline for filing a corporate tax return is set by the state or federal governments. The IRS deadline is March 15 unless a form to extend the deadline is filed on this date. An extension of up to six months is granted, but interest may accrue on any amounts owed during this time.
Taxes paid by corporations to state and federal authorities provide a large source of revenue within government budgets. If these taxes are not paid properly and on time, severe penalties can be imposed. This means that a corporation not only has to pay the appropriate amount, but also any fees or interest allowed by governments. For this reason, corporations may choose to self-audit their company’s books to prevent any IRS or other auditor from finding instances of improper accounting.
In some cases, state or federal governments require quarterly payments of estimated taxes due. At the end of a year, if there is an overpayment, the additional amount paid is refunded or carried over to the next quarter. If there is an underpayment, the corporation must pay the amount plus any fees or interest.
The information used to complete a corporate tax return can be found on a company’s Balance Sheet and Profit and Loss Report. These accounting reports are basic and can be easily generated by virtually all accounting software programs on the market. These two reports reveal a lot about a corporation’s stability and income.
The 12-month period that a corporation reports on a corporate tax return is called a fiscal year. For most companies, the fiscal year is identical to the calendar year and runs from January to December. In other cases, a corporation’s fiscal year may be from July to June or some other 12-month cycle.
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