Form 1120 for your corporation: every year, even without a profit

Form 1120 is the corporate income tax return of a US corporation. If you formed an Inc. in Delaware, Texas or Florida, or elected corporate taxation for your LLC, you file it with the IRS every year. That applies in the first short year, in a loss year and in a year without a single dollar of revenue. This page explains who files Form 1120, which deadlines apply, what goes on the form, how you file and pay, and what filing late costs. How high the total tax burden of a US corporation turns out, including state tax and distributions, is covered in detail on our page on taxation of the US corporation; for an overview of the whole system, see The US tax system and tax law.

1Who files Form 1120

The rule sits right at the start of the IRS instructions: every domestic corporation files an income tax return, whether or not it has taxable income. The only exceptions are organizations exempt under Section 501 and companies that use a special return, such as insurance companies, real estate investment trusts or the S corporation with Form 1120-S. For the ordinary Inc., Form 1120 is the form.

The obligation belongs to the company, not the shareholder. It makes no difference whether the shares are held by a company in Europe, an AG in Switzerland or by you personally. The corporation is a separate taxpayer: it pays its own tax and files its own return. Whatever later flows to the shareholders is taxed separately.

1.1Why an Inc. with a foreign owner stays a C corporation

American founders often choose S corporation status for small corporations, so the profit is taxed directly at the shareholder level. For owners from Europe, that option is off the table. The law does not allow an S corporation to have a shareholder who is a nonresident alien, or a shareholder who is not an individual. An Inc. owned by a foreign company or by you as a nonresident is therefore a C corporation under the tax code, and its return is Form 1120.

1.2How it differs from the other forms

Readers often confuse three neighboring forms with Form 1120. A foreign company doing business in the US itself, such as a European company with a branch in Texas, files Form 1120-F, the return of a foreign corporation. A multi-member LLC without an election is a partnership and files Form 1065; how that works is explained under Form 1065 and K-1. And a single-member LLC without an election is disregarded as a separate taxpayer. If it is owned by a foreign person, it still files a Form 1120, but only as a cover sheet for the Form 5472 report. This pro forma 1120 is not a tax return but a reporting requirement, and it has its own page: Form 5472 and pro forma 1120. Which return belongs to which structure is shown in the overview LLC tax returns by structure.

2The LLC with a corporate election

An LLC can choose to be taxed as a corporation. The instructions are clear: an LLC may file Form 1120 only if it has elected corporate classification on Form 8832. Without that election, the default classification applies: a domestic multi-member LLC is a partnership, and a single-member LLC is disregarded as a separate taxpayer.

The election follows fixed rules under regulation 26 CFR 301.7701-3. The effective date you enter on Form 8832 can be no more than 75 days before the filing date and no more than twelve months after it. If you enter an earlier date, the election takes effect 75 days before filing. Once the company has changed its classification by election, it generally cannot change it again for the following 60 months. A copy of Form 8832 is attached to Form 1120 for the year the election takes effect.

From the effective date, the LLC is a corporation for federal tax purposes. It pays corporate income tax, files Form 1120 and follows the same deadlines as an Inc. Under company law it remains an LLC with an operating agreement and members. How your home country classifies such an LLC is a separate question; we cover it on our page on taxation of the US LLC.

3Deadlines and extensions

The basic rule: a corporation files Form 1120 by the 15th day of the fourth month after its tax year ends. For a calendar-year company, that is April 15 of the following year. If the day falls on a Saturday, Sunday or legal holiday, the next business day is fine. In the year of formation, the same rule applies to the short year, and if you dissolve the company, the final return is due by the 15th day of the fourth month after dissolution.

One exception concerns tax years ending on June 30. These corporations file by the 15th day of the third month, which is September 15.

3.1Form 7004: more time to file, not to pay

Form 7004 gives the corporation an automatic extension. The law grants corporations six months, provided the form arrives on time and the estimated tax is paid. For a calendar year, the filing deadline moves to October 15. The IRS sends no confirmation; you only hear from it if it denies the request.

The second half of that sentence matters: Form 7004 does not extend the time to pay. The tax is due on the original date. Pay later and you pay interest and possibly a late payment penalty, even though the return itself still has time. So if your numbers are not final in April, estimate the tax, pay it, and file the return by October.

4What goes on the form

Form 1120 is not a set of annual financial statements in the European sense, but a tax return with schedules. The first page works out taxable income: gross receipts, cost of goods sold, other income, then deductions such as salaries, rent, interest, depreciation and other business expenses. The header shows the company's name, address, EIN, date of incorporation and total assets at year end. Nothing works without an EIN; how the company gets one is explained under Applying for an EIN.

4.1Schedule J: the tax

On Schedule J, the corporation calculates its tax. The instructions put it simply: taxable income times 21 percent. That is the rate from 26 U.S.C. § 11(b), with no brackets and no allowance. In special cases other items are added, such as the minimum tax for very large groups, which does not affect a typical subsidiary of a mid-sized business. State tax is not part of Form 1120; each state has its own return.

4.2Schedule K: the foreign owner question

Schedule K asks a series of yes/no questions. For owners from Europe, question 7 matters most: does a foreign person own at least 25 percent of the voting power or at least 25 percent of the value of all shares? If you check yes, you enter the percentage and the owner's country. Indirect holdings count too, under the attribution rules of Section 318. If your Inc. is owned by a company that you own, you are the foreign owner through that company.

4.3Schedules L, M-1 and M-2: balance sheet and reconciliation

Schedule L is the balance sheet per books, Schedule M-1 reconciles book income to taxable income, and Schedule M-2 shows the movement in retained earnings. Small corporations may skip all three if both their total receipts and their total assets at year end are under $250,000 and they answer yes to question 13 on Schedule K. From $10 million in total assets, Schedule M-3 replaces M-1.

4.4The signature

The return must be signed by an officer of the corporation: the president, a vice president, the treasurer, the chief accounting officer or another authorized officer. So if you run the business from Europe and are also president of the Inc., you sign yourself. When e-filing, this is done with a PIN on Form 8879-CORP.

5E-filing or paper

For returns filed on or after January 1, 2024, e-filing is mandatory: a corporation that files ten or more returns of any type during the calendar year must also file Form 1120 electronically. Payroll tax returns, excise tax returns and information returns such as Forms 1099 all count. A corporation with employees hits ten quickly, because the quarterly payroll return, Form 941, alone accounts for four a year. If you can't meet the requirement, you can ask the IRS in writing for a waiver where e-filing would cause undue hardship.

If you file on paper, you send the return to the service center the Instructions assign based on the location of the principal place of business and total assets. For paper returns, the timely mailing rule applies: a return mailed on time counts as filed on time, and this also covers certain private delivery services the IRS has approved. Those delivery services cannot deliver to IRS P.O. boxes, though.

6Paying: tax, estimated payments and interest

Corporations pay their federal tax electronically. The Instructions require all deposits to be made by electronic funds transfer, either through the Electronic Federal Tax Payment System or through the company's IRS Business Tax Account. Mailing a check with the return is not the intended way to pay corporate tax.

If the corporation expects to owe $500 or more in tax for the year, it must make estimated payments. They are due on the 15th day of the fourth, sixth, ninth and twelfth months of the tax year, so for a calendar year on April 15, June 15, September 15 and December 15. Underpay, and you owe a penalty, which the company calculates on Form 2220. As a rule, you avoid it by paying on time at least the smaller of the current year's tax and the prior year's tax. If the corporation has overpaid, it can apply for a quick refund on Form 4466.

The IRS charges interest on any tax paid after the due date, even during an extension of time to file. Interest also accrues on certain penalties, such as the late filing penalty, from the due date of the return including extensions. The IRS sets the interest rate under Section 6621.

7What filing late costs

If you don't file Form 1120 by the due date including extensions, the penalty is 5 percent of the unpaid tax for each month or part of a month, up to 25 percent. If the return is more than 60 days late, a minimum penalty applies; for returns due in 2026, it is $525 or the tax owed, whichever is less. Paying the tax late costs 0.5 percent per month or part of a month, also capped at 25 percent.

Both penalties fall away if the corporation shows the delay was due to reasonable cause and not willful neglect. The Instructions advise against attaching such a statement to the return; send it only once an IRS letter about the penalties arrives. There is also a first-time relief rule: if you filed and paid the returns for the three prior years on time, the late filing or late payment penalty is waived. For Form 1120, the IRS applies this rule automatically from returns for tax year 2025 onward, as the Automatic Exemption from Penalty, so the company doesn't need to request anything. How it works in detail, and why it doesn't apply to the Form 5472 penalty, is covered in Penalties and late filing. And if an IRS letter is already on your desk: Mail from the IRS explains the common notices.

8Form 5472 as an attachment

If the corporation is at least 25 percent owned by a foreign person, it is a reporting corporation under Section 6038A. If it had transactions during the year with a related party, such as the shareholder personally, a European parent company or a sister company, it attaches a separate Form 5472 to Form 1120 for each of those parties. Sales, rents, royalties, services, loans and interest are reported in both directions.

Form 5472 is due with Form 1120, including extensions. If it is missing or substantially incomplete, the law imposes $25,000 per tax year. If the failure continues for more than 90 days after IRS notice, a further $25,000 is added for each 30-day period or part of one. For a parent company back home, the form often reflects what group accounting documents anyway: the intercompany charges with the subsidiary. Set it up properly once, and filling it in for later years takes little effort. The parts of the form are explained in detail in Form 5472 and pro forma 1120.

9What comes after the return

9.1Distributions to you or the parent company

The 21 percent is the company's tax. When the corporation distributes profits to a foreign shareholder, it withholds 30 percent tax on the dividend, unless a tax treaty provides a lower rate. The rates under the treaties and how to claim them with Form W-8BEN or W-8BEN-E are covered in US withholding tax. A foreign corporation with a US business that files Form 1120-F may instead owe the 30 percent Branch Profits Tax on its so-called dividend equivalent amount.

9.2The states

Form 1120 covers federal tax only. Most states levy their own corporate income tax or a tax under another name, such as the franchise tax in Texas and Delaware, with their own forms and deadlines. Which obligations your corporation has depending on its location and activities is covered in the overview Tax obligations of a US company; Delaware has its own page: Delaware franchise tax and Annual Report.

9.3Keeping records

The IRS generally has three years after a return is filed to assess the tax on it. If no return was filed at all, that clock never starts. The Instructions recommend keeping records of income, deductions and credits for at least three years after the due date or filing date, whichever is later, and records on acquired property for as long as you need them to establish basis. Corporations filing Form 5472 also have the record-keeping requirements of Section 6038A. How to set up your bookkeeping for this is covered in Bookkeeping for your US LLC, and the annual compliance calendar walks you through the whole year.

In short

• Every US corporation files Form 1120, even without a profit; an LLC only if it has elected corporate taxation on Form 8832.
• For a calendar year, the deadline is April 15; Form 7004 extends the time to file by six months, not the time to pay.
• Federal tax is 21% of taxable income; estimated payments are required once expected tax reaches $500.
• If the corporation is at least 25% foreign-owned, a Form 5472 is required for each related party with reportable transactions.
• Late filing costs 5% of the unpaid tax per month, up to 25%; late payment costs 0.5% per month.

How we help you

• Corporation tax returnForm 1120 and Form 5472 for your US corporation.
• Zero Tax Return LLCPro forma Form 1120 and Form 5472 for the single-member LLC.
• US Tax ConsultationYour US tax question, answered by people who know both sides.
• Form a CorporationThe US corporation (Inc) for growth, investors and your visa.