# S corp tax documents: what the corporation and the shareholder each need

[Home](/) / [Tax document checklists](/checklists/tax-documents) / S corporation

By [Arthur Teboul](/authors/arthur-teboul), Founder, DokuTrak. Published 2026-11-01, updated 2026-11-01.

> **In brief:** Tax deductions for an S corp are taken on Form 1120-S: wages, owner health cover, rent, supplies and the other costs of the business. This checklist splits the papers in two, what the corporation needs for its return and payroll, and what each shareholder needs for the K-1 and basis.

## The checklist: S corporation and shareholder file for Form 1120-S

**Not advice.** This page is general information, not tax, legal or HR advice. Rules change: check the cited source and ask your own professional before you rely on it. Last reviewed October 25, 2026.

Part one is for the corporation’s Form 1120-S; part two is filled in once per shareholder. Tick each line when the document is in the folder.

### Corporation: entity and prior year

- [ ] Form 2553 acceptance letter from the IRS: Shows the effective date of the S election
- [ ] Shareholder list with ownership shares: And any change in ownership during the year
- [ ] Last year’s Form 1120-S with all Schedules K-1: Full filed copy, with the depreciation schedule

### Corporation: books and deductions

- [ ] Trial balance, profit and loss and balance sheet: Year-end reports from the books
- [ ] Bank statements for every corporate account: All months of the tax year
- [ ] Credit card statements for every corporate card: Owner personal charges marked
- [ ] Invoices for fixed assets bought or sold: With the date placed in service or sold
- [ ] Receipts for operating costs: Rent, insurance, software, supplies, fees
- [ ] Form W-9 and copies of Forms 1099-NEC filed: One W-9 per contractor paid
- [ ] Schedules K-2 and K-3 inputs, or the exception notice: Only with foreign activity or foreign shareholders

### Corporation: payroll and owner costs

- [ ] Forms 941 for each quarter and Form 940: Plus state payroll returns
- [ ] Forms W-2 and W-3, owner W-2 included: Owner W-2 shows health premiums in wages
- [ ] Notes supporting the owner’s salary: Duties, hours and pay data used
- [ ] Officer pay detail for Form 1125-E: If total receipts are $500,000 or more
- [ ] Health insurance premium invoices for owners: Premiums paid for more-than-2% shareholders
- [ ] Accountable plan and owner expense reports: Home office, mileage and receipts reimbursed
- [ ] Loan agreements between owners and the corporation: Terms, balances and interest paid

### Each shareholder

- [ ] Schedule K-1 for the year: From the corporation, once the return is done
- [ ] Last year’s Form 7203 or basis worksheet: Stock and debt basis carried forward
- [ ] Distributions received, by date and amount: From the corporate books or bank records
- [ ] Money put in or lent to the corporation: Dates, amounts and loan papers
- [ ] Personal estimated tax payment confirmations: Date and amount of each

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## Two returns, two files

An **S corporation** is a corporation that has elected, on Form 2553, to pass its income, losses, deductions and credits through to its shareholders ([IRS, S corporations](https://www.irs.gov/businesses/small-businesses-self-employed/s-corporations)). The corporation files Form 1120-S, and each shareholder reports a share on their own return ([IRS, About Form 1120-S](https://www.irs.gov/forms-pubs/about-form-1120-s)). So one client is really two jobs, each with its own document list.

Form 1120-S is due by the 15th day of the third month after the tax year ends ([Form 1120-S instructions (2025)](https://www.irs.gov/instructions/i1120s)). For a calendar-year corporation, the 2025 return was due March 16, 2026, because March 15 fell on a Sunday ([Form 1120-S instructions (2025)](https://www.irs.gov/instructions/i1120s)). For the 2026 return, the same rule gives Monday, March 15, 2027 ([Form 1120-S instructions (2025)](https://www.irs.gov/instructions/i1120s)). Shareholders cannot finish their own returns without the K-1, so the corporate file comes first.

A late or incomplete 1120-S is charged per shareholder. For 2025 returns, the charge is $255 a month for each person who was a shareholder, for up to 12 months ([Form 1120-S instructions (2025)](https://www.irs.gov/instructions/i1120s)). For an 1120-S required to be filed in 2027, the monthly figure is $260 ([IRS Rev. Proc. 2025-32](https://www.irs.gov/pub/irs-drop/rp-25-32.pdf)). A corporation with three owners that files two months late on a 2026 return therefore faces $1,560 ([IRS Rev. Proc. 2025-32](https://www.irs.gov/pub/irs-drop/rp-25-32.pdf)).

| Paper | Who needs it | Why |
| --- | --- | --- |
| Form 2553 acceptance letter | Corporation | Shows the S election and its effective date |
| Books, bank and card statements | Corporation | Income and deductions on Form 1120-S |
| Forms 941, 940, W-2 and W-3 | Corporation | Wages, including owner pay |
| Schedule K-1 | Shareholder | Their share of income, deductions and credits |
| Basis worksheet or Form 7203 | Shareholder | Limits on losses and the tax on distributions ([IRS, About Form 7203](https://www.irs.gov/forms-pubs/about-form-7203)) |

## The corporation’s books and deductions

The corporate return starts from the year-end trial balance, profit and loss and balance sheet, backed by every bank and card statement. Ask for last year’s Form 1120-S with every Schedule K-1 too. It carries the balance sheet, retained earnings and the depreciation schedule forward.

Deductions are the costs of running the business, such as rent, insurance, software, supplies, contract labor and professional fees. Each needs an invoice or receipt. When total receipts reach $500,000 or more, officer pay is broken out on Form 1125-E ([Form 1120-S instructions (2025)](https://www.irs.gov/instructions/i1120s)). Equipment rules, such as the yearly de minimis election for small purchases, are on the [small business checklist](/checklists/tax-documents/small-business).

The corporation is also a payer. A web developer it paid $1,000 in 2025 needed a Form 1099-NEC, while one paid $1,000 in 2026 falls under the new line ([Forms 1099-MISC and 1099-NEC instructions, 2025](https://www.irs.gov/pub/irs-prior/i1099mec--2025.pdf)) ([Forms 1099-MISC and 1099-NEC instructions (rev. 12/2026)](https://www.irs.gov/instructions/i1099mec)). Keep a Form W-9 for each one and copies of the forms filed, so contract labor on the return ties to them.

## Owner pay, health cover and reimbursements

Owner pay is where S corporation files go wrong. The corporation must pay a shareholder who works in it **reasonable compensation**, which is wages that fit the services the owner provides, before it makes other distributions ([IRS, S corporation compensation](https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues)). The IRS can reclassify distributions as wages that are subject to employment taxes ([IRS, S corporation compensation](https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues)). Keep notes on the owner’s duties and hours, and any pay data used to set the salary.

Health insurance for an owner with a large stake is a special case. For a more-than-2% shareholder, the corporation deducts the premiums and reports them as wages on the owner’s W-2, subject to income tax withholding ([IRS, S corporation compensation](https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues)). Those extra wages are not subject to Social Security, Medicare or FUTA taxes when paid under a plan for employees ([IRS, S corporation compensation](https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues)). The shareholder can then take an above-the-line deduction for them ([IRS, S corporation compensation](https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues)).

An owner’s home office or car is handled through the corporation, not on the owner’s own Schedule C. An **accountable plan** is a written reimbursement policy under which the owner accounts for expenses with receipts and returns any excess payment ([IRS Publication 463 (2025)](https://www.irs.gov/publications/p463)). Ask for the plan, the expense reports, the mileage logs and the payment records.

## The shareholder’s side: K-1 and basis

Each shareholder needs the Schedule K-1 and the W-2 from the corporation. They also need a running basis figure. **Stock basis** is what the shareholder has in the stock: what they paid or put in, plus income passed through, minus losses and distributions.

Shareholders use Form 7203 to figure the limits on deductions and losses that pass through from the corporation ([IRS, About Form 7203](https://www.irs.gov/forms-pubs/about-form-7203)). It must be filed by a shareholder who claims a loss, receives a non-dividend distribution, disposes of stock or gets a loan repaid by the corporation ([Form 7203 instructions](https://www.irs.gov/instructions/i7203)). Keep last year’s Form 7203 or basis worksheet, plus records of any money the shareholder put in or lent to the company.

Distributions need a date and amount for each shareholder. The [Schedule K-1 guide](/documents/schedule-k-1) explains what each line of the form shows.

## Loose ends that slow a 1120-S

A few items come up every year. If the corporation has foreign activity or foreign shareholders, the preparer may need Schedules K-2 and K-3; a corporation that meets the domestic filing exception must notify shareholders instead ([Form 1120-S instructions (2025)](https://www.irs.gov/instructions/i1120s)). Ask early whether any of that applies.

Others are routine: loan papers for money moved between the owner and the company, state annual reports and franchise tax, fixed asset invoices and inventory counts. Mixed money causes the most rework. When the owner pays a personal bill from the company account, the preparer has to sort out whether it was pay, a loan, a distribution or a reimbursement. Ask the owner to flag those charges on the statements before sending them.

- Personal bills paid by the company: flag as a distribution or owner pay.
- Company bills paid personally: support with a receipt and an expense report.
- Money the owner put in during the year: say whether it was a loan or capital.

## Questions people ask

### What tax forms does an S corp need to file?

The corporation files Form 1120-S and gives each shareholder a Schedule K-1 ([IRS, About Form 1120-S](https://www.irs.gov/forms-pubs/about-form-1120-s)). If it has employees, including working owners, it also files payroll returns such as Forms 941, 940 and W-2.

### When is the 2026 Form 1120-S due?

For a calendar-year S corporation, the 15th day of the third month after year-end is Monday, March 15, 2027 ([Form 1120-S instructions (2025)](https://www.irs.gov/instructions/i1120s)). The 2025 return was due March 16, 2026, since March 15 fell on a Sunday ([Form 1120-S instructions (2025)](https://www.irs.gov/instructions/i1120s)).

### What is reasonable compensation for an S corp owner?

It is the wage the corporation must pay a shareholder-employee for their services before making non-wage distributions ([IRS, S corporation compensation](https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues)). The IRS looks at the source of the gross receipts: the owner’s own work, staff, or capital and equipment ([IRS, S corporation compensation](https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues)).

### Can an S corp deduct health insurance for the owner?

Yes. Premiums for a more-than-2% shareholder-employee are deductible by the corporation and reported as wages on the owner’s Form W-2 ([IRS, S corporation compensation](https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues)). Under a plan for employees, those wages are not subject to Social Security or Medicare tax.

### Who must file Form 7203?

An S corporation shareholder who claims a loss, receives a non-dividend distribution, disposes of stock or receives a loan repayment from the corporation ([Form 7203 instructions](https://www.irs.gov/instructions/i7203)).

## Sources

- [IRS, S corporations](https://www.irs.gov/businesses/small-businesses-self-employed/s-corporations): S corporations elect to pass corporate income, losses, deductions and credits through to their shareholders.
- [IRS, About Form 1120-S](https://www.irs.gov/forms-pubs/about-form-1120-s): Form 1120-S reports the income, deductions and credits of an S corporation.
- [Form 1120-S instructions (2025)](https://www.irs.gov/instructions/i1120s): Due the 15th day of the 3rd month (March 16, 2026 for calendar 2025), $255 per shareholder per month for late returns, Form 1125-E at $500,000 of receipts, and Schedules K-2 and K-3.
- [IRS Rev. Proc. 2025-32](https://www.irs.gov/pub/irs-drop/rp-25-32.pdf): For an S corporation return required to be filed in 2027, the section 6699(b)(1) penalty amount is $260.
- [IRS, S corporation compensation](https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues): Reasonable compensation before distributions, reclassification as wages, the W-2 treatment of health premiums for 2-percent shareholders, and the shareholder’s above-the-line deduction.
- [IRS, About Form 7203](https://www.irs.gov/forms-pubs/about-form-7203): Shareholders use Form 7203 to figure limits on their share of S corporation deductions, credits and other items.
- [Form 7203 instructions](https://www.irs.gov/instructions/i7203): Form 7203 is filed by shareholders who claim a loss, receive a non-dividend distribution, dispose of stock or receive a loan repayment.
- [IRS Publication 463 (2025)](https://www.irs.gov/publications/p463): Under an accountable plan, the employee accounts for expenses and returns any excess reimbursement.
- [Forms 1099-MISC and 1099-NEC instructions (rev. 12/2026)](https://www.irs.gov/instructions/i1099mec): For tax years beginning after 2025, the Form 1099-NEC threshold is $2,000.
- [Forms 1099-MISC and 1099-NEC instructions, 2025](https://www.irs.gov/pub/irs-prior/i1099mec--2025.pdf): For 2025, Form 1099-NEC reported payments of $600 or more.

## More on this topic

- [Schedule K-1](/documents/schedule-k-1)
- [LLC tax documents checklist](/checklists/tax-documents/llc)
- [Home office deduction records](/checklists/tax-documents/home-office)
- [Tax document checklist (all clients)](/blog/tax-document-checklist)
- [S Corp Tax Organizer: Form 1120-S Questions for Clients](/templates/tax-organizers/s-corporation)

## About the author

Arthur Teboul (Founder, DokuTrak) is building DokuTrak after watching professionals lose hours chasing clients for documents over email. [Arthur Teboul](/authors/arthur-teboul).

How this page was made (methodology): it is built from the primary sources listed under Sources, and every rule and figure on it links to the source it comes from. Last updated October 25, 2026. Spotted an error or a rule that changed? [Contact us](/contact).

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