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Last Updated: 10/26/2017

Frequently Asked Questions

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S Corporation Tax

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S Corporation Tax > File and Pay

  • Who is required to file an S corporation tax return? Back to top

    If you are a corporation doing business in Minnesota and you have elected to be taxed as an S corporation under section 1362 of the Internal Revenue Code (IRC), you must file Minnesota Form M8, S Corporation Return. Before you complete Form M8, complete federal Form 1120S,  U.S. Income Tax Return for an S Corporation, and supporting schedules.

    The entire share of an entity’s income is taxed to the shareholder, whether or not it is actually distributed. Each shareholder must include their share of income on their tax return. However, the S corporation taxes and minimum fee are paid by the entity.

  • I filed federal Form 2553 with the IRS to elect to become an S corporation. Do I also need to file a similar form with Minnesota?Back to top

    No. Once you have filed Form 2553, Election by a Small Business Corporation, with the IRS and it has been approved, Minnesota automatically accepts your S corporation status.​

  • Do I need a Minnesota tax ID number as well as a federal ID number? Back to top

    Yes. Register for a Minnesota tax ID number online or call 651-282-5225 or 1-800-657-3605. TTY users, call 711 for Minnesota Relay. See additional information on registering your business.​

  • Where can I get Form M8?Back to top

    You can download Form M8, S Corporation Return, and instructions from our website.

    You may request forms to be faxed to you by sending an email to businessincome.tax@state.mn.us.

    The department no longer prints most business tax forms and instructions, including those for S corporations.

  • If I cannot pay on time what are the penalties?Back to top

    A 6 percent late payment penalty will be assessed on any tax not paid by the regular due date.

    If you file your return after the regular due date with a balance due, an additional 5 percent penalty will be assessed on the unpaid tax.
     
    There is also a late filing penalty if you file after the extended due date and owe tax. The late filing penalty is 5 percent of any tax not paid by the regular due date.
     
    Interest also accrues on the unpaid tax and penalties.
    For more information, see Penalty Information for Businesses.

  • Do shareholders have to add back their share of the minimum fee to their income?Back to top

    No. The minimum fee is paid by the S corporation and does not flow through to the shareholders.​

  • Does Schedule KS have to be issued if there are no nonresident shareholders and no modifications or credits passed through to the shareholders?Back to top

    No. Schedule KS is a supplemental schedule intended to give shareholders needed information for them to complete their Minnesota individual income tax returns. So, if there are no modifications or credits, you do not need to issue Schedule KS to your shareholders who are Minnesota residents. Nonresident shareholders will need the information from the Schedule KS to complete their Form M1, Individual Income Tax Return.​

  • When determining composite income tax, can I reduce the taxable income by a prior year’s net operating loss?Back to top

    No. Only the current year’s income is included in the composite income tax.​

  • If the S corporation does business in State with reciprocity (Wisconsin, North Dakota or Michigan) and the sole shareholder is a Minnesota resident, does the shareholder have to file a return in the other state?Back to top

    Yes. The shareholder would be required to file a return in the other state. The income earned by an S corporation does not qualify for the exemption under the reciprocity agreements.

    Note: The Minnesota-Wisconsin income tax reciprocity agreement ended January 1, 2010.​

  • How does the income get taxed if an S corporation has nonresident shareholders?Back to top

    Since S corporation income is pass-through income, shareholders who have income from an S corporation with Minnesota source income would be required to file an individual Form M1, Minnesota income tax return, unless they elect to have the S corporation pay composite income tax on their behalf.​

  • How do I pay electronically?Back to top

    If you’re paying by Internet or phone, you’ll need your Minnesota tax ID number, password and bank routing and account numbers.

    Note: If you’re using the system for the first time and you need a temporary password, call Registration Services at 651-282-5225 before you log in.