Alabama Form 20S: S Corporation Filing Instructions
Properly file your Alabama S Corp tax return. Our guide clarifies the Form 20S process, from gathering financial data to navigating the PTE tax election.
Alabama Form 20S is the state’s income tax return for businesses treated as S corporations for federal tax purposes. The form is used to report financial activities like income, deductions, and tax credits to the Alabama Department of Revenue. It calculates the corporation’s state income tax liability and documents the distribution of income to shareholders, who report this on their personal state tax returns.
Filing Requirements for Form 20S
Any S corporation incorporated in Alabama or conducting business in the state must file Form 20S. This requirement applies if the corporation has a tax presence, or “nexus,” in the state. Nexus is established if the business exceeds certain thresholds during the tax period, including:
- Having more than $68,000 in property
- Having more than $68,000 in payroll
- Having more than $675,000 in sales sourced to Alabama
- Having 25% or more of its total property, payroll, or sales within the state
The deadline for filing Form 20S is the 15th day of the third month after the corporation’s tax year closes, which is March 15th for calendar-year filers. Alabama grants an automatic six-month filing extension, moving the final deadline to September 15th for calendar-year businesses. This is an extension to file, not to pay; any estimated tax must be paid by the original due date to avoid penalties and interest.
Information and Documentation Needed
A complete copy of the federal S corporation return, Form 1120-S, including all accompanying schedules and statements, is required. Failure to attach the federal return can cause the state return to be considered improperly filed. You will also need basic business identifiers, such as the corporate name, physical address, Federal Employer Identification Number (EIN), and the Alabama account number.
Detailed records for each shareholder are required, including their full name, address, Social Security Number or TIN, and the percentage of stock they own. This information is used to prepare an Alabama Schedule K-1 for each shareholder, which must be attached to the Form 20S. The Schedule K-1 details each shareholder’s pro rata share of the corporation’s income, deductions, and credits to be reported on their personal income tax returns.
Financial statements, specifically the income statement and balance sheet, are needed to report the company’s financial position and results of operations. For corporations operating in multiple states, this data is used to determine the Alabama apportionment factor, which calculates the portion of business income attributable to the state. This requires detailing property, payroll, and sales figures both within and outside of Alabama.
Before filing, the corporation must decide whether to make the Alabama Pass-Through Entity (PTE) tax election. This election allows the S corporation to pay the Alabama income tax at the entity level on behalf of its owners. This choice impacts the tax calculation on Form 20S and the tax liability of the individual shareholders, and the decision must be made prior to filing.
The current-year Form 20S, its instructions, and related schedules can be downloaded from the Alabama Department of Revenue’s website. Using the correct version of the form is required for processing.
Completing and Filing Form 20S
Completing Form 20S involves transferring figures from the federal Form 1120-S and then making specific Alabama adjustments on Schedule A to reconcile federal and state income. The final calculated tax liability is then entered on the appropriate line of the return.
Alabama requires most businesses to file electronically through the My Alabama Taxes (MAT) portal. Taxpayers can register for an account on the Department of Revenue’s website to file Form 20S and make payments. For entities eligible to file by paper, the mailing address is provided in the form instructions.
Payment of any tax due must be submitted by the original filing deadline. Payments can be made through the MAT portal, electronic funds transfer (EFT), or by credit card. If filing a paper return with a payment, a completed Form PTE-V payment voucher must be included with the check. Do not attach other forms, like estimated tax vouchers, to the main Form 20S mailing.
After filing, the corporation must provide a copy of the completed Alabama Schedule K-1 to every shareholder. This document is needed for shareholders to complete their individual Alabama income tax returns.