Knowledge Center

How Corporations are Taxed

As a separate legal entity, a corporation must submit a tax return each year with the IRS. For corporations with a fiscal year ending December 31, tax returns are due on March 15. A corporation must file a tax return even if it does not have income or no tax is due. C corporations file tax returns on Form 1120 or 1120A.

Although S corporations do not pay federal taxes at the corporate level, they still must prepare a separate tax return (Form 1120S).

For 2011, the federal income tax rate for a C corporation is as follows:

Income

Tax Rate

Up to $50,000

15%

From $50,001 to $75,000

25%

From $75,001 to $100,000

34%

From $100,001 to $335,000

39%

From $335,001 to $10,000,000

34%

From $10,000,001 to $15,000,000

35%

From $15,000,001 to $18,333,333

38%

Over $18,333,333

35%

Some states, including California, also have a state corporate income tax. Corporations that anticipate a tax liability of $500 or more must estimate their taxes and make quarterly estimated tax payments. Corporations with employees are required to pay federal (and sometimes state) payroll and unemployment taxes.


Banner Icon Make today the day you start something amazing. Form your Corporation. Get Started

Start your own business and take control of your life right now

Over 1 million businesses have trusted us to get started.
Get a personalized legal solution that’s just right for you.

LegalZoom - Here to help