Today TaxMama hears from Abe in the Tax Parlor, who says “I have a California-based S-Corp, and I know the 1120-S is due 3/15/07. I thought all income gets passed through to my 1040 and doesn’t get taxed. Does this mean that on 03/15/07 I don’t owe any taxes, just the 1120-S showing the numbers on my Profit and Loss Statements?
Relax, no worries.
For IRS purposes, your S Corp owes no taxes. Hooray!
I can’t say the same about your state taxes. You’re in California. There’s a minimum annual fee of $800. Or 1.5% of profits, whichever is higher. You’ll need to pay that on March 15th when you file.
Good news, though. For the first year of an S Corp, you don’t have to pay the $800 minimum fee. You only have to pay 1.5% of your profits, if any.
Here is California’s FTB Pub 1060 to explain how that works.
Now, Abe, a suggestion. Just file an extension on March 15th and pay California the $800 using Form 3539. https://www.ftb.ca.gov/forms/06_forms/06_3539.pdf
File form 7004 for the IRS extension and pay nothing. https://www.irs.gov/pub/irs-pdf/f7004.pdf
Then, you have six months to get the 1120S/100S right.
And yes, it will all flow through to your personal tax return in the end.
And remember, you’ll find answers to lots of questions about S Corporations and other tax information, free. Where? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips. Please click on the subscribe link and join us.]
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- Ask TaxMama :: Where taxes are fun and answers are free
- TaxTwist.com :: Where TaxQuips will be moving & You can add your comments
- California’s FTB Pub 1060 :: Guide for new S Corporations
- Calfiornia Form 3539 :: S Corp & Corporation Extension – Payment Voucher
- IRS Form 7004 :: S Corp & Corporation Extension – Payment Voucher