Can I File My S Corp With My Personal Taxes?

You cannot file a single, combined tax return for yourself and your S Corporation because the business is a separate legal entity with its own distinct tax filing requirements. An S Corp is a “pass-through” entity, which means the corporation itself does not typically pay income tax. Instead, it files an informational return, and the profits or losses are then “passed through” to the owners to report on their personal tax returns.

This process involves two primary forms that work in sequence. First, the S Corporation files Form 1120-S, the U.S. Income Tax Return for an S Corporation, to report its financial activity to the IRS. Following that filing, each shareholder receives a Schedule K-1, a document that provides the information needed to report their portion of the company’s income or loss on their personal Form 1040.

The S Corporation’s Informational Tax Return

The S Corporation’s tax process begins with filing Form 1120-S, the U.S. Income Tax Return for an S Corporation. This is a mandatory informational return that reports the company’s income, deductions, profits, and losses for the tax year. It is a return for the business entity itself and is completely separate from the personal filings of its shareholders.

To complete Form 1120-S, the corporation must report detailed financial data, including its gross receipts or sales. If the business sells products, it must calculate its Cost of Goods Sold, which involves accounting for inventory to determine the direct costs of producing the goods sold. The form also requires a detailed breakdown of business expenses, such as officer compensation, salaries, rent, taxes, interest, and advertising.

Another deduction is depreciation, which is the expense of using business assets like equipment and vehicles over time, calculated using specific IRS rules. Finally, Form 1120-S requires the S Corporation to present basic balance sheet information, including a snapshot of the company’s assets, liabilities, and equity. By subtracting total deductions from total income, the form calculates the corporation’s ordinary business income or loss for the year.

The Schedule K-1 Your Link to Personal Taxes

After the S Corporation finalizes its Form 1120-S, it must prepare a Schedule K-1 for each shareholder. This document serves as the bridge connecting the S Corporation’s tax return to the personal tax returns of its owners. The corporation sends a copy of the Schedule K-1 to each shareholder and also files a copy with the IRS, which allows for cross-referencing.

The Schedule K-1’s primary function is to report each shareholder’s specific, pro-rata share of the company’s financial results. This allocation is determined by the shareholder’s percentage of stock ownership for the tax year. For instance, if a shareholder owns 40% of the stock, their Schedule K-1 will reflect 40% of the company’s income, deductions, and other items from Form 1120-S.

Shareholders will find several figures detailed on their K-1, with the most prominent being their share of the corporation’s ordinary business income or loss. Other items that may be reported include their portion of net rental real estate income, interest income, and any dividend income. The K-1 also passes through specific deductions, such as the Section 179 deduction, and various tax credits.

A shareholder must wait to receive their completed Schedule K-1 before filing their personal tax return. The information on this form is not optional and must be reported accurately on the shareholder’s Form 1040. Filing without it would result in an incomplete and incorrect personal tax return, likely leading to notices and potential penalties from the IRS.

How to Report S Corp Income on Form 1040

Once a shareholder receives their Schedule K-1, they can proceed with preparing their personal tax return. The data from the K-1 is not entered directly onto the main page of Form 1040. Instead, the information is first transferred to a separate form, Schedule E (Supplemental Income and Loss), which is then attached to the Form 1040.

The shareholder will use Part II of Schedule E, titled “Income or Loss From Partnerships and S Corporations,” to enter the figures from their K-1. The ordinary business income or loss figure from the K-1 is entered here. This section of Schedule E is designed to gather all income or loss from pass-through business entities in one place.

After entering the S Corporation information, the shareholder calculates the total income or loss on Schedule E. This final figure is then carried over and reported on Schedule 1 of Form 1040. This combines the business’s profit or loss with the shareholder’s other personal income sources to determine their total income for the year.

Filing Deadlines and Estimated Tax Payments

S Corporations and their shareholders have two separate sets of tax deadlines. For calendar-year businesses, the S Corporation’s informational return, Form 1120-S, is due to the IRS by March 17, 2025. This deadline is about a month earlier than the personal tax deadline to ensure that shareholders receive their Schedule K-1s with enough time to prepare their own returns. The standard deadline for an individual’s personal Form 1040 is April 15th.

A responsibility for S Corporation shareholders is the payment of estimated taxes. Because profit distributions from an S Corp do not have taxes automatically withheld in the way that an employee’s paycheck does, the shareholder is personally responsible for paying taxes on their share of the profits throughout the year. This is accomplished by making quarterly estimated tax payments to the IRS to cover both income tax and self-employment taxes.

For 2025, these quarterly payments are due on April 15, June 16, September 15, and January 15 of the following year. Shareholders must estimate their total annual income from the S Corp and other sources to calculate the appropriate amount to pay each quarter. Making these timely payments is necessary to avoid a potential underpayment penalty when the final tax liability is calculated.