Atlanta CPA Teaches Understanding Georgia S Corporation Returns
Atlanta CPA Teaches Understanding Georgia S Corporation Returns
If you own your own business and have set up as an S Corporation you are certainly surprised by many of the nuances of Form 1120S for the IRS and Form 600S for the state of Georgia. Like its federal counterpart Form 1120S, the Georgia Form, the 600S, the return is due by March 15th of each year or by the fifteenth of the third month, after the end of the company’s fiscal year-end. Also, as S Corporations are a “flow through” entity the profits or losses of the business show up on a individual shareholder’s personal return. Thus, there are no income taxes paid with either the filing of the IRS’s Form 1120S or Georgia’s Form 600S. However there is a net worth tax which is assessed and paid on the Georgia Form 600S based upon a company’s net book value, which is essentially the combined total of their retained earnings accounts. Returns are filed to the Georgia Department of Revenue.
As part of the Federal 2008 Economic Stimulus package passed Section 179 Depreciation (what taxpayers can write-off in full for fixed asset purchases) was increased to $250,000. As with past years this limit applies both at the corporate and individual shareholder level. The Georgia limit for Section 179 Depreciation, with the passing of the state’s Small Business and Work Opportunity Act of 2007, was increased to $128,000. Thus Georgia Corporations when making the full deduction at the federal level on Form 1120S must make an adjustment to the Form 600S. A complete copy of the federal return should be attached to the Georgia Return prior to filing. If the Georgia Form 600S is amended at the corporate level, there is no separate return and prepares should check the appropriate box on the form to indicate an amended return is being filed. If for any reason a federal return is adjusted, amended or changed due to an audit the corresponding Georgia Return should be amended as well within 180 days of any IRS change. Amendments to Georgia are reported on Form 500X. If any Georgia Corporation does business or owns property within the state then Form 600S and the Allocation and Apportionment of Income schedules should be completed.
If the Georgia Return or Form 600S needs to be extended it can be by filing a Form 7004 with the Internal Revenue Service that Georgia accepts as having been sufficient notice to them. If you are going to owe any taxes with the Georgia Return you will want to pay them via Georgia Form IT 560C by the original due date of the return as otherwise penalties and interest will be assessed on late payment. Keep in mind at all times, that an extension to file, is not an extension to pay.
In general terms the tax imposed and assessed by the state of Georgia is based upon the portion of business income that is reasonably attributable to Georgia sources, property owned and business done in the state. For tax years beginning January 1, 2008 or later the allocation is calculated by using the 100% gross receipts factor.
If you have a non-resident shareholder (an individual owner of the S Corporation who does not reside in Georgia), they are required to attach a consent agreement acknowledging their responsibility to file a individual or personal Georgia Return, a Form 500, to report and apportion their income to Georgia as well as other states where they file individually.
John Dillard is a Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304.
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