C Corporation Income Tax
A C corporation income tax is reported on the IRS tax form 1120 or 1120-A which is the US Corporation Tax Return or US Corporation Short Form Income Tax Return.
Why should I form a corporation?
By corporation, people usually mean a C corporation. If they mean S corporation, they would usually specify that it is an S corporation. When forming a corporation, you should intend to transfer assets in exchange for capital stock. You can transfer money or real estate properties or both. Shareholders transfer assets into a corporation in exchange for the stocks or shares of the corporation.
Every C corporation must file a tax return to the IRS even if there is no taxable income to be reported and no taxes are owed. No gross income or low gross income does not exempt the corporation from filing taxes. Corporations may not need to file taxes if they are either exempt from tax filing or has dissolved.
How are corporate income taxed?
Corporate income are taxed to the corporation, unlike in the case of an S corporation which are taxed to the shareholders. When profits of the corporation are distributed to the shareholders as dividends, the dividends are taxed to the shareholders.
Estimated tax requirements for corporations
Every corporation in the United States is required to pay estimated tax if the corporation is expected to owe $500 or more in taxes. How to pay estimated tax? If the corporation's estimated tax is $500 or more, the estimated tax payments must be deposited with an authorized financial institution or the Federal Reserve. When making each estimated tax payment deposit, an IRS tax form 8109 must also be filed.