1125-E: Compensation of Officers (Revision 2016-10)
Federal · IRS · Used for tax years 2024, 2025
Form 1125-E reports officers’ compensation, time devoted to the business, and stock ownership. It totals officer compensation and subtracts amounts claimed on Form 1125-A or elsewhere on the return.
Who files this form
Complete and attach Form 1125-E if your entity:
- Files Form 1120, 1120-C, 1120-F, 1120-RIC, 1120-REIT, or 1120S;
- Has total receipts of $500,000 or more; and
- Deducts compensation paid to officers.
The calculation of total receipts depends on which income tax return your entity files. Use the definition in the Form 1125-E instructions for that return.
What you'll need
Have the information needed to complete the form:
- The entity's name and employer identification number (EIN).
- Receipt and income amounts from the applicable entity return to determine total receipts.
- Each officer's name and Social Security number (SSN). You may use only the last four digits of the SSN.
- Each officer's percentage of time devoted to the business and percentages of common and preferred stock owned.
- Each officer's total deductible compensation, including applicable salaries, commissions, bonuses, and taxable fringe benefits.
- Amounts of officers' compensation claimed on Form 1125-A or elsewhere on the return.
Keep books and records relating to the form as long as their contents may be material to administering federal tax law.
How to file
Attach Form 1125-E to Form 1120, 1120-C, 1120-F, 1120-REIT, 1120-RIC, or 1120S, as applicable. The supplied text does not give a mailing address or e-filing directions.
- Complete line 1, columns (a) through (f), for all officers.
- Enter total officers' compensation on line 2.
- On line 3, enter officers' compensation deductible elsewhere on the return.
- Subtract line 3 from line 2 and enter the result on line 4. Also enter that amount on Form 1120, page 1, line 12, or the appropriate line of your entity's return.
Common mistakes
- Including the wrong S corporation fringe benefits. In column (f), include fringe benefits and expenditures made on behalf of officers who own more than 2% of the corporation's stock. Do not include fringe benefits for officers who own 2% or less. Those amounts are reported elsewhere on the return.
- Deducting taxable fringe benefit expenses twice. For benefits such as personal use of a car, do not deduct as wages the amount allocated to depreciation and other expenses claimed elsewhere on the return.
- Overlooking wage credits. If the corporation claims a credit for wages paid or incurred, it may need to reduce its deduction for officers' compensation.
Questions people ask
Must I provide each officer's full Social Security number?
No. You may elect to provide only the last four digits in column (b).
Who counts as an officer?
A corporation determines who is an officer under the laws of the state or country where it is incorporated.
Can a consolidated group use one Form 1125-E?
Yes. The common parent may file one Form 1125-E on behalf of the affiliated group's members as part of its consolidated return. Information must be provided for each officer of the affiliated group.
What compensation belongs in column (f)?
Enter each officer's total deductible compensation, such as salaries, commissions, bonuses, and taxable fringe benefits. The instructions give special rules for S corporation officers' fringe benefits and limits on certain compensation deductions.