What you need to know
As an S Corp shareholder, you are required to file both a business tax return and a personal tax return. This helps maintain legal and financial separation between personal and business activities.
If you're opting to file your Individual Tax Return independently (rather than seeking assistance from a CPA or other tax preparer), you'll need to input certain details from your Business Tax Return. This article will walk you through the process of extracting relevant information from your Business Tax Return and entering it into the tax software you're using to prepare your Form 1040.
Note: Your Business Tax Return must be complete before you can file your Individual Tax Return. Should your Business Tax Return be pending, you might need to consider filing for an Individual Tax Return extension. It's important to remember that an extension of time to file your tax return does not extend the deadline for paying any taxes owed. If you expect to owe taxes, you should estimate the amount due and pay it by the original filing deadline to avoid penalties and interest.
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Learn about the process and implications of filing extensions here
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For advice on estimating taxes and adhering to payment deadlines, refer to the IRS instructions here
How to enter Business Tax Return Data
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Locate your 2023-Schedule-K1 packet from your Document Center Schedule.
This should be one of the earliest pages in your packet, and contains much of the information you need to input into your tax software. -
Enter the data found in your Schedule K-1 into your tax software.
Copy the information over from your K-1 line by line as your software asks for it. If you reach a line that has ‘STMT’ or *V in it, it means you need to refer to another statement, which was included in your package from Collective. -
Open the Code V Statement from your Business Tax Return package.
This form shows information about your Qualified Business Income Deduction. You’ll enter the information when prompted by your tax software. -
Input information from your Shareholder’s Basis Worksheet into your software as prompted.
Many software programs require you to complete Form 7203, S Corporation Shareholder Stock and Debt Basis Limitations. To do this, you’ll need to match the between your Worksheet and Form 7203.
See this in action with a quick interactive walk through!
Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as financial or tax advice. It is not intended to be a substitute for obtaining accounting or other financial advice from an appropriate financial adviser or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.