Instructions for IRS Form 1120-w - Estimated Tax for Corporations 2018

October 1, 2018 "Instructions For Irs Form 1120-w - Estimated Tax For Corporations" contain the updated filing procedures for the IRS-issued Form 1120-w. Download your copy of the instructions by clicking the link below.

IRS Form 1120-w is a tax form issued by the United States Internal Revenue Service.

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2018
Department of the Treasury
Internal Revenue Service
Instructions for
Form 1120-W
Section references are to the Internal Revenue Code unless
and to figure the amount of the penalty. See Form 2220 and the
otherwise noted.
instructions for Form 2220.
Overpayment of Estimated Tax
Future Developments
A corporation that has overpaid its estimated tax may apply for a
quick refund if the overpayment is at least 10% of its expected
For the latest information about developments affecting Form
income tax liability and at least $500. To apply, file Form 4466,
1120-W and its instructions, such as legislation enacted after
Corporation Application for Quick Refund of Overpayment of
they were published, go to IRS.gov/Form1120W.
Estimated Tax, after the end of the tax year and before the
corporation files its income tax return. See the instructions for
What’s New
Form 4466.
Methods of Tax Payment
Corporate tax rates. For tax years beginning after December
31, 2017, the graduated corporate tax structure is no longer
Some corporations (described below) are required to
applicable. Corporations, including qualified personal service
electronically deposit all depository taxes, including estimated
corporations and members of a controlled group, are taxed at a
tax payments.
flat rate of 21% of taxable income. See the instructions for lines 1
Electronic Deposit Requirement
and 2, later.
Alternative minimum tax (AMT). The AMT does not apply for
Corporations must use electronic funds transfer to make all
tax years beginning after December 31, 2017.
federal tax deposits (such as deposits of employment, excise,
and corporate income tax). This includes installment payments
Base erosion minimum tax. For tax years beginning after
of estimated tax. Generally, electronic funds transfer is made
December 31, 2017, the base erosion minimum tax is included
using the Electronic Federal Tax Payment System (EFTPS).
in figuring estimated tax payments. An applicable corporation
However, if the corporation does not want to use EFTPS, it can
will be subject to the tax in an amount equal to 5% of the
arrange for its tax professional, financial institution, payroll
modified taxable income of the corporation for the tax year, over
service, or other trusted third party to make electronic deposits
an amount equal to the regular tax liability of the corporation for
on its behalf. Also, it may arrange for its financial institution to
the tax year, reduced by certain credits. See the instructions for
initiate a same-day tax wire payment (discussed below) on its
line 5.
behalf. EFTPS is a free service provided by the Department of
General Instructions
the Treasury. Services provided by a tax professional, financial
institution, payroll service, or other third party may have a fee.
Who Must Make Estimated Tax
To get more information about EFTPS or to enroll in EFTPS,
visit eftps.gov.
Payments
Depositing on time. For deposits made by EFTPS to be on
Corporations generally must make estimated tax payments if
time, the corporation must submit the deposit by 8 p.m. Eastern
they expect their estimated tax (income tax less credits) to be
time the day before the date the deposit is due. If the corporation
$500 or more.
uses a third party to make deposits on its behalf, they may have
S corporations must make estimated tax payments for certain
different cutoff times.
taxes. S corporations should see the Instructions for Form
Same-day wire payment option. If the corporation fails to
1120S, U.S. Income Tax Return for an S Corporation, to figure
submit a deposit transaction on EFTPS by 8 p.m. Eastern time
their estimated tax payments.
the day before the date a deposit is due, it can still make the
Tax-exempt corporations, tax-exempt trusts, and domestic
deposit on time by using the Federal Tax Collection Service
private foundations must make estimated tax payments for
(FTCS). Before using the same-day wire payment option, the
certain taxes. These entities should see the instructions for their
corporation will need to make arrangements with its financial
tax return to figure the amount of their estimated tax payments.
institution ahead of time. Please check with the financial
When To Make Estimated Tax
institution regarding availability, deadlines, and costs. To learn
more about the information the corporation will need to provide
Payments
its financial institution to make a same-day wire payment, visit
IRS.gov/SameDayWire.
The installments generally are due by the 15th day of the 4th,
6th, 9th, and 12th months of the tax year. If any due date falls on
Foreign corporations. If a foreign corporation maintains an
a Saturday, Sunday, or legal holiday, the installment is due on
office or place of business in the United States, it must use
the next regular business day.
electronic funds transfer (as discussed above) to make
Underpayment of Estimated Tax
installment payments of estimated tax.
If the foreign corporation does not maintain an office or place
A corporation that does not make estimated tax payments when
of business in the United States, it may pay the estimated tax by
due may be subject to an underpayment penalty for the period of
EFTPS if it has a U.S. bank account. The foreign corporation
underpayment. Use Form 2220, Underpayment of Estimated
may also arrange for its financial institution to submit a same-day
Tax by Corporations, to see if the corporation owes a penalty
Apr 13, 2018
Cat. No. 52102x
2018
Department of the Treasury
Internal Revenue Service
Instructions for
Form 1120-W
Section references are to the Internal Revenue Code unless
and to figure the amount of the penalty. See Form 2220 and the
otherwise noted.
instructions for Form 2220.
Overpayment of Estimated Tax
Future Developments
A corporation that has overpaid its estimated tax may apply for a
quick refund if the overpayment is at least 10% of its expected
For the latest information about developments affecting Form
income tax liability and at least $500. To apply, file Form 4466,
1120-W and its instructions, such as legislation enacted after
Corporation Application for Quick Refund of Overpayment of
they were published, go to IRS.gov/Form1120W.
Estimated Tax, after the end of the tax year and before the
corporation files its income tax return. See the instructions for
What’s New
Form 4466.
Methods of Tax Payment
Corporate tax rates. For tax years beginning after December
31, 2017, the graduated corporate tax structure is no longer
Some corporations (described below) are required to
applicable. Corporations, including qualified personal service
electronically deposit all depository taxes, including estimated
corporations and members of a controlled group, are taxed at a
tax payments.
flat rate of 21% of taxable income. See the instructions for lines 1
Electronic Deposit Requirement
and 2, later.
Alternative minimum tax (AMT). The AMT does not apply for
Corporations must use electronic funds transfer to make all
tax years beginning after December 31, 2017.
federal tax deposits (such as deposits of employment, excise,
and corporate income tax). This includes installment payments
Base erosion minimum tax. For tax years beginning after
of estimated tax. Generally, electronic funds transfer is made
December 31, 2017, the base erosion minimum tax is included
using the Electronic Federal Tax Payment System (EFTPS).
in figuring estimated tax payments. An applicable corporation
However, if the corporation does not want to use EFTPS, it can
will be subject to the tax in an amount equal to 5% of the
arrange for its tax professional, financial institution, payroll
modified taxable income of the corporation for the tax year, over
service, or other trusted third party to make electronic deposits
an amount equal to the regular tax liability of the corporation for
on its behalf. Also, it may arrange for its financial institution to
the tax year, reduced by certain credits. See the instructions for
initiate a same-day tax wire payment (discussed below) on its
line 5.
behalf. EFTPS is a free service provided by the Department of
General Instructions
the Treasury. Services provided by a tax professional, financial
institution, payroll service, or other third party may have a fee.
Who Must Make Estimated Tax
To get more information about EFTPS or to enroll in EFTPS,
visit eftps.gov.
Payments
Depositing on time. For deposits made by EFTPS to be on
Corporations generally must make estimated tax payments if
time, the corporation must submit the deposit by 8 p.m. Eastern
they expect their estimated tax (income tax less credits) to be
time the day before the date the deposit is due. If the corporation
$500 or more.
uses a third party to make deposits on its behalf, they may have
S corporations must make estimated tax payments for certain
different cutoff times.
taxes. S corporations should see the Instructions for Form
Same-day wire payment option. If the corporation fails to
1120S, U.S. Income Tax Return for an S Corporation, to figure
submit a deposit transaction on EFTPS by 8 p.m. Eastern time
their estimated tax payments.
the day before the date a deposit is due, it can still make the
Tax-exempt corporations, tax-exempt trusts, and domestic
deposit on time by using the Federal Tax Collection Service
private foundations must make estimated tax payments for
(FTCS). Before using the same-day wire payment option, the
certain taxes. These entities should see the instructions for their
corporation will need to make arrangements with its financial
tax return to figure the amount of their estimated tax payments.
institution ahead of time. Please check with the financial
When To Make Estimated Tax
institution regarding availability, deadlines, and costs. To learn
more about the information the corporation will need to provide
Payments
its financial institution to make a same-day wire payment, visit
IRS.gov/SameDayWire.
The installments generally are due by the 15th day of the 4th,
6th, 9th, and 12th months of the tax year. If any due date falls on
Foreign corporations. If a foreign corporation maintains an
a Saturday, Sunday, or legal holiday, the installment is due on
office or place of business in the United States, it must use
the next regular business day.
electronic funds transfer (as discussed above) to make
Underpayment of Estimated Tax
installment payments of estimated tax.
If the foreign corporation does not maintain an office or place
A corporation that does not make estimated tax payments when
of business in the United States, it may pay the estimated tax by
due may be subject to an underpayment penalty for the period of
EFTPS if it has a U.S. bank account. The foreign corporation
underpayment. Use Form 2220, Underpayment of Estimated
may also arrange for its financial institution to submit a same-day
Tax by Corporations, to see if the corporation owes a penalty
Apr 13, 2018
Cat. No. 52102x
Line 9a. 2017 Tax
payment on its behalf or can arrange for either a qualified
intermediary, tax professional, payroll service, or other trusted
Figure the corporation's 2017 tax in the same way that line 8 of
third party to make a deposit on its behalf using a master
this worksheet was figured, using the taxes and credits from the
account.
2017 income tax return. See the instructions for the 2017 Form
In addition, the foreign corporation has the option to pay the
1120. Large corporations, see the instructions for line 11 below.
estimated tax due by check or money order, payable to the
“United States Treasury.” To ensure proper crediting, enter the
If a return was not filed for the 2017 tax year showing a
foreign corporation's EIN, “Form 1120-F (or 1120-FSC, if
liability for at least some amount of tax or the 2017 tax year was
applicable) estimated tax payment,” and the tax period to which
for less than 12 months, do not complete line 9a. Instead, skip
the payment applies on the check or money order. The
line 9a and enter the amount from line 8 on line 9b.
payments must be sent to the Internal Revenue Service Center,
Line 10. Installment Due Dates
P.O. Box 409101, Ogden, UT 84409.
Refiguring Estimated Tax
Calendar-year taxpayers: Enter 4-17-2018, 6-15-2018,
9-17-2018, and 12-17-2018, respectively, in columns (a) through
If, after the corporation figures and deposits estimated tax, it
(d). If the due date falls on a Saturday, Sunday, or legal holiday,
finds that its tax liability for the year will be more or less than
enter the next business day.
originally estimated, it may have to refigure its required
installments. If earlier installments were underpaid, the
Fiscal-year taxpayers: Enter the 15th day of the 4th, 6th,
corporation may owe a penalty.
9th, and 12th months of your tax year in columns (a) through (d).
If the due date falls on a Saturday, Sunday, or legal holiday,
An immediate catchup payment should be made to reduce
enter the next business day.
the amount of any penalty resulting from the underpayment of
Line 11. Required Installments
any earlier installments, whether caused by a change in
estimate, failure to make a deposit, or a mistake.
Payments of estimated tax should reflect any 2017 overpayment
that the corporation chose to credit against its 2018 tax. The
Specific Instructions
overpayment is credited against unpaid required installments in
the order in which the installments are required to be paid.
All line references on Form 1120-W are references to
Form 1120, U.S. Corporation Income Tax Return. All
!
If the corporation uses the annualized income installment
other entities must determine their estimated tax liability
method and/or the adjusted seasonal installment method, or is a
CAUTION
by using the applicable line from their income tax return and the
"large corporation," see the instructions below.
maximum rate that is in effect for their applicable tax year.
Annualized income installment method and/or adjusted
seasonal installment method. If the corporation's income is
Lines 1 and 2
expected to vary during the year because, for example, it
For tax years beginning after December 31, 2017, the graduated
operates its business on a seasonal basis, it may be able to
corporate tax structure is no longer applicable. Corporations,
lower the amount of one or more required installments by using
including qualified personal service corporations and members
the annualized income installment method and/or the adjusted
of a controlled group, are taxed at a flat rate of 21% of taxable
seasonal installment method. For example, a ski shop, which
income. Multiply the expected taxable income from line 1 by
receives most of its income during the winter months, may be
21%. Enter this amount on line 2.
able to benefit from using one or both of these methods in
figuring one or more of its required installments.
Line 3. Tax Credits
To use one or both of these methods, complete Schedule A.
For information on tax credits the corporation can take, see the
If Schedule A is used for any payment date, it must be used for
instructions for Form 1120, Schedule J, lines 5a through 5e, or
all payment due dates. To get the amount of each required
the instructions for the applicable lines and schedule of other
installment, Schedule A automatically selects the smallest of (a)
income tax returns.
the annualized income installment (if applicable), (b) the
adjusted seasonal installment (if applicable), or (c) the regular
Line 5. Other Taxes
installment under section 6655(d)(1) (increased by any
Other taxes include the base erosion minimum tax and any
recapture of a reduction in a required installment under section
recaptured tax credits. For information on other taxes the
6655(e)(1)(B)).
corporation may owe, see the instructions for Form 1120,
Large corporations. A large corporation is a corporation that
Schedule J, line 9, or the instructions for the applicable line and
had, or whose predecessor had, taxable income of $1 million or
schedule of other income tax returns.
more for any of the 3 tax years immediately preceding the 2018
Line 7. Credit for Federal Tax Paid on
tax year, or if less, the number of years the corporation has been
in existence. For this purpose, taxable income is modified to
Fuels and Other Refundable Credits
exclude net operating loss and capital loss carrybacks or
carryovers.
See Form 4136, Credit for Federal Tax Paid on Fuels, to find out
Large corporations figure the amount to enter on line 11 as
if the corporation qualifies to take this credit. Also include on
line 7 any other refundable credit, including any credit the
follows. If Schedule A is used, also follow these instructions to
corporation is claiming under section 4682(g)(2) for tax on
figure the amounts to enter on Schedule A, Part III, line 35.
ozone-depleting chemicals. For information on other refundable
If line 8 is smaller than line 9a: Enter 25% of line 8 in columns
credits, see the instructions for Form 1120, Schedule J, or the
(a) through (d) of line 11.
If line 9a is smaller than line 8: Enter 25% of line 9a in column
instructions for the applicable line or schedule of other income
tax returns.
(a) of line 11. In column (b), determine the amount to enter as
follows:
1. Subtract line 9a from line 8,
2. Add the result to the amount on line 8, and
-2-
Instructions for Form 1120-W (2018)
3. Multiply the result in 2 above by 25% and enter the result
average of 69%, 74%, and 67% is 70%, the base period
in column (b). Enter 25% of line 8 in columns (c) and (d).
percentage for May through October 2018 is 70%. Therefore,
the amusement park qualifies for the adjusted seasonal
Schedule A
installment method.
If only the adjusted seasonal installment method (Part I) is used,
Line 2
complete Parts I and III of Schedule A. If only the annualized
income installment method (Part II) is used, complete Parts II
If the corporation has certain extraordinary items, special rules
and III. If both methods are used, complete all three parts. Enter
apply. Do not include on line 2 the de minimis extraordinary
in each column on page 1, Part I, line 11, the amounts from the
items that the corporation chooses to include on line 9b. See
corresponding column of line 38. If Schedule A is used for any
Extraordinary items above.
payment date, it must be used for all payment dates.
Line 9b
Do not figure any required installment until after the end
If the corporation has extraordinary items of $1,000,000 or more,
of the month preceding the due date for that installment.
!
a net operating loss deduction, or a section 481(a) adjustment,
CAUTION
special rules apply. Include these amounts on line 9b for the
Extraordinary items. Generally, under the annualized income
appropriate period. Also include on line 9b the de minimis items
installment method, extraordinary items must be taken into
that the corporation chooses to exclude from line 2. See
account after annualizing the taxable income for the
Extraordinary items above.
annualization period. Similar rules apply in determining taxable
income under the adjusted seasonal installment method. An
Line 10
extraordinary item includes:
Figure the tax on the amount on line 9c by following the same
Any item identified in Regulations section 1.1502-76(b)(2)(ii)
steps used to figure the tax on Form 1120-W, page 1, line 2.
(C)(1), (2), (3), (4), (7), and (8);
A net operating loss carryover;
Line 15. Reserved.
A section 481(a) adjustment; and
Net gain or loss from the disposition of 25% or more of the fair
Line 16. Other Taxes
market value of the corporation's business assets during the tax
For the same taxes used to figure page 1, Part I, line 5, figure the
year.
amounts for the months shown in the column headings above
These extraordinary items must be accounted for in the
line 1.
appropriate annualization period. However, a net operating loss
deduction and a section 481(a) adjustment (unless the
Line 18. Credits
corporation makes the alternative choice under Regulations
Enter the credits to which the corporation is entitled for the
section 1.6655-2(f)(ii)(C)) are treated as extraordinary items
months shown in the column headings above line 1.
occurring on the first day of the tax year in which the item is
taken into account in determining taxable income.
Part II. Annualized Income Installment
De minimis rule. Extraordinary items identified above that
Method
are less than $1,000,000 (other than a net operating loss
carryover or a section 481(a) adjustment) may be annualized
using the general rules of Regulations section 1.6655-2(f), or if
Line 20. Annualization Periods
the corporation chooses, may be taken into account after
Enter in the space on line 20, columns (a) through (d),
annualizing the taxable income for the annualization period.
respectively, the annualization periods that the corporation is
For more information regarding extraordinary items, see
using, based on the options listed below. For example, if the
Regulations section 1.6655-2(f)(ii) and the examples in
corporation elects Option 1, enter on line 20 the annualization
Regulations section 1.6655-2(f)(vii). Also see Regulations
periods 2, 4, 7, and 10, in columns (a) through (d), respectively.
section 1.6655-3(d)(3).
Use Option 1 or Option 2 only if the corporation elected
Part I. Adjusted Seasonal
to use one of these options by filing Form 8842, Election
!
Installment Method
To Use Different Annualization Periods for Corporate
CAUTION
Estimated Tax, on or before the due date of the first required
Complete this part only if the corporation's base period
installment payment. Once made, the election is irrevocable for
percentage for any 6 consecutive months of the tax year equals
the particular tax year.
or exceeds 70% (0.70). Figure the base period percentage using
the 6-month period in which the corporation normally receives
the largest part of its taxable income. The base period
1st
2nd
3rd
4th
percentage for any period of 6 consecutive months is the
Installment
Installment
Installment
Installment
average of the three percentages figured by dividing the taxable
Standard option
3
3
6
9
income for the corresponding 6-consecutive-month period in
Option 1
2
4
7
10
. . . . .
each of the 3 preceding tax years by the taxable income for each
of their respective tax years.
Option 2
3
5
8
11
. . . . .
Example. An amusement park with a calendar year as its tax
year receives the largest part of its taxable income during the
6-month period from May through October. To compute its base
Line 21. Taxable Income
period percentage for this 6-month period in 2018, the
amusement park figures its taxable income for each May–
If a corporation has income includible under section 951(a)
October period in 2015, 2016, and 2017. It then divides the
(controlled foreign corporation income), special rules apply.
taxable income for each May–October period by the total taxable
income for that particular tax year. The resulting percentages are
Amounts includible in income under section 951(a) generally
69% (0.69) for May–October 2015, 74% (0.74) for May–October
must be taken into account in figuring the amount of any
2016, and 67% (0.67) for May–October 2017. Because the
annualized income installment as the income is earned. The
-3-
Instructions for Form 1120-W (2018)
Line 28. Credits
amounts are figured in a manner similar to the way in which
partnership income inclusions are taken into account in figuring
Enter the credits to which the corporation is entitled for the
a partner's annualized income installments as provided in
months shown in each column on line 20. Do not annualize any
Regulations section 1.6654-2(d)(2).
credit. However, when figuring the credits, annualize any item of
Safe harbor election. Corporations may be able to make a
income or deduction used to figure the credit.
prior year safe harbor election. Under the election, an eligible
Part III. Required Installments
corporation is treated as having received ratably during the tax
year items of income under section 951(a) equal to 115% (100%
Line 33
for a noncontrolling shareholder) of the amounts shown on the
corporation's return for the first preceding tax year (the second
Before completing line 33 in columns (b) through (d), complete
preceding tax year for the first and second required
lines 34 through 38 in each of the preceding columns. For
installments).
example, complete lines 34 through 38 in column (a) before
For more information, see section 6655(e)(4)(B) and
completing line 33 in column (b).
Regulations section 1.6655-2(f)(3)(v)(B)(2).
Line 35
Extraordinary items. If the corporation has extraordinary
“Large corporations,” see the instructions for page 1, line 11, for
items, special rules apply. Do not include on line 21 the de
the amount to enter.
minimis extraordinary items that the corporation chooses to
include on line 23b. See Extraordinary items, earlier.
Line 38. Required Installments
Line 22. Annualization Amounts
For each installment, enter the smaller of line 34 or line 37 on
line 38. Also enter the result on page 1, Part I, line 11.
Enter the annualization amounts for the option used on line 20.
For example, if the corporation elects Option 1, enter on line 22
Paperwork Reduction Act Notice. Your use of this form is
the annualization amounts 6, 3, 1.71429, and 1.2, in columns (a)
optional. It is provided to aid the corporation in determining its
through (d), respectively.
tax liability.
You are not required to provide the information requested on
1st
2nd
3rd
4th
a form that is subject to the Paperwork Reduction Act unless the
Installment
Installment
Installment
Installment
form displays a valid OMB control number. Books or records
Standard option
4
4
2
1.33333
relating to a form or its instructions must be retained as long as
Option 1
6
3
1.71429
1.2
. . . . .
their contents may become material in the administration of any
Internal Revenue law. Generally, tax returns and return
Option 2
4
2.4
1.5
1.09091
. . . . .
information are confidential, as required by section 6103.
The time needed to complete and file this form will vary
Line 23b
depending on individual circumstances. The estimated burden
for business taxpayers filing this form is approved under OMB
If the corporation has certain extraordinary items of $1,000,000
control number 1545-0123 and is included in the estimates
or more, a net operating loss deduction, or a section 481(a)
shown in the instructions for their business income tax return.
adjustment, special rules apply. Include these amounts on
line 23b. Also include on line 23b the de minimis extraordinary
If you have comments concerning the accuracy of these time
items that the corporation chooses to exclude from line 21. See
estimates or suggestions for making this form simpler, we would
Extraordinary items, earlier.
be happy to hear from you. You can send us comments through
IRS.gov/FormComments. Or you can write to the Internal
Line 24
Revenue Service, Tax Forms and Publications Division, 1111
Figure the tax on the amount in each column on line 23c by
Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not
following the same steps used to figure the tax on Form 1120-W,
send the tax form to this office. Instead, keep the form for your
page 1, line 2.
records.
Line 25. Reserved.
Line 26. Other Taxes
For the same taxes used to figure line 5 of Form 1120-W, figure
the amounts for the months shown on line 20.
-4-
Instructions for Form 1120-W (2018)

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