6 Steps To Complete Form 1120

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Preparing and filing tax returns can be a daunting task for corporations, especially when it comes to completing Form 1120. This form is used by corporations to report their income, deductions, and credits to the Internal Revenue Service (IRS). To help make the process easier, we have broken down the steps to complete Form 1120 into six manageable steps.

Step 1: Gather Necessary Information

Before starting to fill out Form 1120, it's essential to gather all the necessary information and documents. This includes:

• The corporation's name, address, and Employer Identification Number (EIN)
• The tax year being reported
• The corporation's accounting method (cash or accrual)
• The corporation's total income from all sources
• The corporation's total deductions and credits
• The corporation's tax liability or refund due

Having all the necessary information and documents readily available will make the process of completing Form 1120 much easier.

Step 2: Complete the Top Portion of Form 1120

The top portion of Form 1120 includes the corporation's name, address, and EIN. This information should be filled out accurately and completely.

Corporation's Name and Address

• Line 1: Enter the corporation's name exactly as it appears on the certificate of incorporation.
• Line 2: Enter the corporation's address, including the street address, city, state, and ZIP code.

Employer Identification Number (EIN)

• Line 3: Enter the corporation's EIN.

Step 3: Report Income

The next step is to report the corporation's income from all sources. This includes:

• Gross receipts or sales
• Cost of goods sold
• Gross profit
• Ordinary income from other sources

Gross Receipts or Sales

• Line 1: Enter the total gross receipts or sales for the tax year.

Cost of Goods Sold

• Line 2: Enter the total cost of goods sold for the tax year.

Gross Profit

• Line 3: Calculate the gross profit by subtracting the cost of goods sold from the gross receipts or sales.

Ordinary Income from Other Sources

• Line 4: Enter the total ordinary income from other sources, such as interest, dividends, and rents.

Step 4: Claim Deductions

The next step is to claim deductions for the corporation. This includes:

• Salaries and wages
• Rent
• Utilities
• Depreciation
• Interest

Salaries and Wages

• Line 1: Enter the total salaries and wages paid to employees for the tax year.

Rent

• Line 2: Enter the total rent paid for the tax year.

Utilities

• Line 3: Enter the total utilities paid for the tax year.

Depreciation

• Line 4: Enter the total depreciation for the tax year.

Interest

• Line 5: Enter the total interest paid for the tax year.

Step 5: Claim Credits

The next step is to claim credits for the corporation. This includes:

• Foreign tax credit
• General business credit
• Research credit
• Low-income housing credit

Foreign Tax Credit

• Line 1: Enter the total foreign tax credit for the tax year.

General Business Credit

• Line 2: Enter the total general business credit for the tax year.

Research Credit

• Line 3: Enter the total research credit for the tax year.

Low-Income Housing Credit

• Line 4: Enter the total low-income housing credit for the tax year.

Step 6: Calculate Tax Liability or Refund Due

The final step is to calculate the corporation's tax liability or refund due. This is done by subtracting the total deductions and credits from the total income.

We hope this article has been helpful in guiding you through the process of completing Form 1120. If you have any questions or need further assistance, please don't hesitate to contact us.

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