120S: Arizona S Corporation Income Tax Return (2024)
Arizona · Arizona DOR · Used for tax years 2024
Arizona Form 120S is the 2024 Arizona S Corporation Income Tax Return. It reports distributive income or loss, calculates Arizona tax due or overpayment, and includes a section for S corporations that elect to pay tax on pass-through income at the entity level.
What you'll need
Have these records ready to complete the return:
- Federal Form 1120-S, including Schedule K: Form 120S uses the federal business activity code and total distributive income or loss.
- Shareholder records: Names, addresses, tax identification numbers, residency or entity types, ownership percentages, and distributive shares of income. Schedule C also asks for shareholder counts and ownership shares based on participation in the PTE election.
- Payment records: Dates and amounts of extension payments, corporate estimated tax payments, and PTE estimated tax payments. For an amended return, gather prior payment and overpayment information.
- Credit forms, if applicable: Arizona Form 300 for credit recapture and nonrefundable credits, and the applicable refundable credit forms listed on the return: Forms 308, 334, and 349.
- Multistate records and schedules, if applicable: Arizona and everywhere totals for the applicable property, payroll, and sales factors. Include schedules for nonapportionable or allocable income and other income allocated to Arizona. Qualifying air carriers must use Schedule ACA, and qualifying multistate service providers must include Schedule MSP.
How to file
Form 120S must be e-filed unless the S corporation has a waiver or is exempt from e-filing. The supplied form does not give a mailing address or explain how to obtain a waiver.
Mark the return as original or amended, and identify the calendar or fiscal tax year. The declaration must be signed by one or more of these officers: the president, treasurer, or another principal officer.
Common mistakes
- Leaving out shareholders: Complete Schedule B for all shareholders. Include additional schedules if there are more than 10.
- Using inconsistent PTE income totals: Lines 43A and 43B must add up to line 43. Lines 39, 41, 43, and 45 must add up to line 37.
- Reporting an incomplete ownership total: Schedule C, line C8, column (c), should equal 1.000000.
- Using the wrong multistate schedule: Qualifying air carriers must use Schedule ACA. Qualifying multistate service providers must include Schedule MSP. If “Sales Factor Only” is checked, complete only Schedule A, Section A3, lines a through f.
- Overlooking finalized federal examination changes: The note in Schedule E says to report these changes separately to the Arizona Department of Revenue or file amended returns within ninety days after final determination.
Questions people ask
When should the corporation complete Part 2?
Complete Part 2 only if the corporation answered “Yes” to Question A on page 1, indicating that it elected to pay tax on its pass-through income at the entity level.
What PTE tax rate appears on the 2024 form?
The form uses a PTE tax rate of 2.5% on lines 47 and 51. Line 52 adds those amounts to calculate the PTE tax owed.
Which lines apply if the corporation has federal-level taxable income or only credit recapture tax?
If the corporation has income subject to tax at the federal level, such as excess net passive income or capital gains/built-in gains, complete lines 2 through 36. If its only tax liability is from recapturing Arizona tax credits, complete lines 13 through 36.
Can an overpayment be applied to next year's estimated tax?
Yes. On the 2024 form, line 35 lets the corporation apply an amount from line 34 to 2025 estimated tax. Line 36 shows the remaining amount to be refunded.