Form 1120-S is the yearly federal income tax return of an S corporation. For a calendar-year company it is due March 15, and Form 7004 gives an automatic 6-month extension.
| Form | When | What it does |
|---|---|---|
| Form 2553 | When electing S status | Makes the S corporation election |
| Form 1120-S | March 15 for a calendar year | Reports the corporation’s income and pass-through items |
| Schedule K-1 | With the 1120-S | Gives each shareholder their share |
| Form 7004 | By the original due date | Automatic 6-month extension to file |
| Forms 941 and W-2 | Quarterly and yearly | Wages paid to employees, including working shareholders |
See Form 2553 for the election and the C corp vs S corp guide for how the two compare.
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Two owners run a landscaping company as a calendar-year S corporation. Each owns 50% and both work in the business full time. For 2026, the return is due Monday, March 15, 2027.
Their accountant is still waiting on equipment depreciation details in early March, so the company files Form 7004 before March 15. The new deadline for the 1120-S is Wednesday, September 15, 2027. The accountant sends the owners an estimate of their K-1 amounts so they can plan their own returns.
During the year, each owner was paid a salary through payroll every two weeks, with federal withholding, Social Security and Medicare, and both appear on the company’s Forms 941 and W-2. The rest of the profit was taken as distributions. If they had taken no salary at all for full-time work, the return would have been an easy target for questions about unpaid payroll taxes.
Shareholders who work in an S corporation should receive reasonable compensation as wages for the services they provide, before taking the rest of the profit as distributions. There is no fixed formula. Factors that are commonly considered include the owner’s duties, training and experience, the time they spend in the business, and what the business would pay someone else to do the same work.
Keep the evidence simple: a written note of each owner’s role, the hours they typically work, and a comparison with local pay for similar jobs. Run the owner’s salary through payroll on a regular schedule, like any other employee, so withholding and payroll taxes are deposited on time and the wages appear on Form 941 and Form W-2.
An S corporation that runs two cafes has two shareholders. One manages both cafes full time; the other invested money and does not work in the business.
The managing owner is paid a salary through payroll, set by comparing what the company would pay a multi-site manager locally. She receives a W-2 for the salary and a Schedule K-1 for her share of the profit. The passive owner does no work for the company, so he receives no wages, only a K-1 and his share of any distributions.
For a calendar-year S corporation, March 15. For a fiscal year, the 15th day of the third month after the year ends.
File Form 7004 by the original due date for an automatic 6-month extension of time to file.
Form 1120 is the return for a C corporation, which pays tax at the corporate level. Form 1120-S is for an S corporation, whose items pass through to shareholders.
Shareholders who work in the business should be paid wages for that work through payroll, with withholding and payroll taxes.
Pay for the owner’s work that is in line with what the business would pay someone else for the same services, considering duties, time and experience.
An owner who works in the business and is paid wages gets a W-2 for the wages and a Schedule K-1 for their share of the corporation’s income.
Approved hours, breaks and missed-punch corrections come together in signed reports, ready to export to PDF or Excel.