A corporation is considered a separate tax entity and is subject to federal income tax. To calculate your corporate income tax, you must file a Form 1120, even if your corporation had no taxable income. Corporate tax returns with December 31 year-end dates are usually due by March 15 each year.
Instructions
1. Download IRS Form 1120, along with the instructions.
2. Collect your balance sheets, inventory sheets, expense statements and any additional financial statements.
3. Determine your corporation's gross income by totaling sales, dividends, royalties, interest and capital gains.
4. Determine your corporation's deductions. These may include salaries and wages, repair and maintenance, taxes, licenses, interest, charitable contributions and depreciation. Subtract these from the total income.
5. Subtract any special deductions, such as losses. The result is your corporation's taxable income.
6. Refer to the Tax Rate Schedule under Schedule J in the Form 1120 instructions to calculate your tax liability.
7. Subtract any overpayments from the previous year and any estimated tax payments from your tax liability. Add any tax penalties your corporation incurred. This is your corporation's tax liability.
8. Determine if you are exempt from the alternative minimum tax (AMT). You are exempt if your corporation is in its first year or it was treated as exempt from AMT before 1997 and your gross did not exceed $7.5 million in the three previous years. If you are not exempt, refer to IRS Form 4626 to determine your AMT. If this figure is greater than your expected tax liability, you must pay the AMT. Otherwise, use your corporation's tax liability from Form 1120.
