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2020 IA 1120S Income Tax Return for S Corporations
Who Must File shareholder with the IA Schedule K-1 that
Every S corporation doing business in Iowa, identifies the jurisdiction and the shareholder’s
deriving income from sources within Iowa, or pro-rata share of the income, tax liability, and tax
which is domiciled in Iowa, must file an Iowa S paid in that jurisdiction. A shareholder will not be
corporation return. S corporations, interest permitted to claim an out-of-state tax credit on the
charge domestic international sales corporations, IA 130 for that income tax unless the shareholder
and foreign sales corporations should file an IA receives that supplemental schedule from the S
1120S. If the S corporation is a financial corporation and submits a copy with the IA 1040.
institution, it must also file an IA 1120F. Note: A
If the S corporation is itself an owner of another
non-Iowa S corporation should not file only
pass-through entity that paid entity-level income
because one or more of its shareholders are Iowa
tax to another state, local jurisdiction, or foreign
residents or because the S corporation is
country on income also subject to tax in Iowa, and
registered with the Iowa Secretary of State.
the S corporation receives a schedule from that
When and Where to File pass-through entity identifying the jurisdiction and
The IA 1120S is due on or before the last day of the S corporation’s pro-rata share of the income,
the fourth month after the close of the taxable income tax liability, and income tax paid in that
year. If you owe tax on built-in gains or passive jurisdiction, the S corporation may in turn report
investment income per line 11, Part III, an that income tax to its shareholders on a
automatic extension of up to six months to file will supplemental schedule with the shareholder’s IA
be granted only if at least 90% of the total tax Schedule K-1. The supplemental schedule must
liability is paid by the due date of the return. The identify the jurisdiction and pass-through entity
6 month extension also applies to all filers with that paid the income tax, and the shareholder’s
zero balance due. pro-rata share of that income, income tax liability,
Mail returns to: Corporation Return Processing, and income tax paid. The S corporation may not
Iowa Department of Revenue, PO Box 10468, report this tax to its shareholders as described
Des Moines IA 50306-0468. above if the S corporation does not receive the
appropriate schedule from the other pass-
Composite Filing through entity. The S corporation should keep the
An S corporation may file an Iowa composite schedule it received from the other pass-through
individual income tax return and pay any tax due entity because the Department may request it of
on behalf of nonresident shareholders. See IA the resident shareholder in order to prove the
1040C for further information. credit claimed on the IA 130. The resident
Iowa Resident Out-of-State Tax Credit shareholder is responsible for providing
2020 Iowa Acts, House File 2641, Division XVII, documentation of the out-of-state tax paid by a
modified the Iowa Out-of-State Tax Credit for tax pass-through entity at the Department’s request.
years beginning on or after January 1, 2020, to Example: Partnership X earns $2,000 of income
allow Iowa residents to claim the credit for certain in State A, which imposes an entity-level income
entity-level income taxes paid by a pass-through tax directly on the partnership. Partnership X
entity (partnership, S corporation, fiduciary) to pays $100 of income tax to State A. Partnership
another state, local jurisdiction, or foreign country X is owned 50% by Y, an S corporation, and
on income also subject to tax in Iowa, but only if provides a schedule to Y indicating that Y’s pro-
the shareholder receives a supplemental rata share of the income taxed by State A is
schedule from the S corporation reporting certain $1,000, and Y’s pro-rata share of the income tax
information. If the S corporation paid entity-level imposed by and paid to State A is $50. Y is owned
income tax (including composite return income 50% by individual Z, a resident of Iowa. Y
tax) to another state, local jurisdiction, or foreign provides a schedule to individual Z indicating that
country on the distributive share of the Z’s pro-rata share of Partnership X’s income
shareholder’s income also subject to tax in Iowa, taxed by State A is $500, and Z’s pro-rata share
provide a supplemental schedule to the of Partnership X’s income tax imposed by and
42-005a (10/13/2020)
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