120S: Arizona S Corporation Income Tax Return (2025)
Arizona · Arizona DOR · Used for tax years 2025
Arizona Form 120S is the 2025 Arizona S Corporation Income Tax Return. It reports distributive income or loss, Arizona tax liability, credits, payments, and any tax due or overpayment. It also includes a calculation of tax on pass-through income paid at the entity level.
What you'll need
Have these records and forms ready, as applicable:
- Federal Form 1120-S, including Schedule K: Form 120S uses the total distributive income or loss from Schedule K and the business activity code from Form 1120-S.
- Shareholder information: Names, addresses, tax identification numbers, residency status, ownership shares, income shares, and PTE election information. Complete Schedule B for all shareholders and include additional schedules if there are more than 10.
- Payment records: Dates and amounts of extension payments, S corporation estimated payments, and PTE estimated payments for Schedule D.
- Tax credit forms: Arizona Form 300 for credit recapture and nonrefundable credits, plus the form numbers for credits claimed.
- Multistate income records and schedules: Schedules supporting nonapportionable or allocable income and other income allocated to Arizona. Use Schedule A or Schedule ACA for the Arizona apportionment ratio. Qualifying multistate service providers must include Schedule MSP.
- Business records: The date business began in Arizona or income was first derived from Arizona sources, the location of tax records, and the tax accounting method for Schedule E.
How to file
Form 120S must be e-filed unless the S corporation has a waiver or is exempt from e-filing. The form refers to the instructions for details, but no instructions were provided here.
The declaration must be signed by the president, treasurer, or another principal officer. Mark whether the return is original or amended, and check the extension box if filing under an extension.
The supplied form does not give a mailing address or explain how to submit an e-filed return.
Common mistakes
- Part-year resident income totals do not match: Lines 43A and 43B must add up to line 43.
- Shareholder income totals do not match: Lines 39, 41, 43, and 45 must add up to line 37.
- Ownership shares do not total correctly: Schedule C, line C8, column (c), should equal 1.000000.
- Using the wrong apportionment schedule: Qualifying air carriers must use Schedule ACA. Qualifying multistate service providers must include Schedule MSP.
- Completing too much of Schedule A for sales-factor-only apportionment: If that box is checked on page 1, complete only Section A3, lines a through f.
- Completing Part 2 without checking the special reminder: If estimated payments were made but the S corporation is not claiming the PTE election, the form says to consult the instructions before completing Part 2.
Questions people ask
Which lines apply if the corporation has income taxed at the federal level?
Complete lines 2 through 36 if the S corporation has income subject to federal-level tax, such as excess net passive income or capital gains/built-in gains. If its only tax liability is from recapturing Arizona tax credits, complete lines 13 through 36.
When should the corporation complete Part 2?
Complete Part 2 only if the corporation answered “Yes” to the PTE election question on page 1, or if it made estimated payments but is not claiming the PTE election. In the second situation, the form says to consult the instructions first.
What PTE tax rate is printed on the 2025 form?
Part 2 uses a rate of 2.5% (0.0250) on lines 47 and 51 to calculate tax attributable to shareholders who did not opt out of the election.
Can an overpayment be applied to next year's estimated tax?
Yes. Line 35 lets the corporation apply an amount from its overpayment on line 34 to 2026 estimated tax. Line 36 shows the amount to be refunded after subtracting line 35 from line 34.