What is Form 1120-S?
Definition Form 1120-S is the income tax return filed by S corporations. It is largely informational because the corporation itself usually pays no federal income tax; instead it reports income, deductions, and credits and issues a Schedule K-1 to each shareholder. The form also tracks items like shareholder basis and reasonable compensation that affect how much tax owners ultimately pay.
Because the numbers on this return flow straight to owners' personal returns, errors in items like wages or distributions can cascade into multiple individual filings.