Reducing personal accountability for company debts and responsibilities is one of the key benefits of creating a corporation. Corporations, however, are subject to different tax laws than sole proprietorships or partnerships. Whether S-Corporations are required to pay quarterly taxes is one of the issues that frequently comes up.
Yes, to answer briefly. S-Corporations must pay anticipated taxes on a quarterly basis, just like regular corporations. As opposed to employees, corporations do not have taxes withdrawn from their salary, thus in order to avoid underpayment fines and interest, they must make estimated tax payments throughout the year.
S-Corporations must use Form 1120-W, which is used to calculate estimated tax payments for corporations, to calculate the amount of estimated tax payments. If an S-Corp expects to owe at least $500 in taxes for the year, it is required to make estimated tax payments.
S-Corporations are required to submit Form 1120S as their annual tax return in addition to paying taxes on a quarterly basis. The 15th day of the third month after the conclusion of the corporation’s tax year is when this return is due. For instance, the tax return is due on March 15th if the S-Corporation’s tax year ends on December 31st.
Yes, an LLC (Limited Liability Company) may elect, by filing Form 2553, to be considered for tax purposes as an S-Corporation. Members of LLCs may benefit tax-wise from this because they may be able to pay less in self-employment taxes.
The LLC must fill out Form 2553 with basic company information, including its name, address, and Employer Identification Number (EIN). The LLC must also provide its owners’ names and the date on which the S-Corporation election took effect. Each LLC member must sign the paperwork once it has been filled out.
No, in order to elect S-Corporation status, an LLC does not need to submit Form 8832 (Entity Classification Election) before submitting Form 2553. To switch from being taxed as a partnership or sole proprietorship to a corporation, the LLC must first file Form 8832.
Taxpayers can forgo their right to additional administrative or judicial review of a tax dispute by submitting Form 870. When a taxpayer and the IRS have reached a settlement agreement and the taxpayer wishes to forego further legal action, this form is frequently employed. By executing Form 870, the taxpayer consents to pay the tax due and waives any right to appeal the assessment.
The question of whether an S-Corp must pay quarterly taxes is unrelated to Form 1128. A corporation may request a change in its accounting period or fiscal year by submitting Form 1128 by the corporation’s tax return due date for the year of the sought change.