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S Corporations

Learn about the tax requirements for S corporations.

Overview

Shareholders in an S corporation can be:

  • Individuals
  • Other businesses and organizations, such as corporations and trusts.

Entities that are S corporations for federal purposes are S corporations for Massachusetts purposes, with the exception of security corporations.

An S corporation's income, losses, and deductions are passed through to the shareholders, and are reported and taxed on the shareholders' individual returns. 

S corporations are liable for the non-income measure of the corporate excise and are liable for the income measure of the corporate excise on any income that is taxable to the S corporation federally. S corporations that are financial institutions are not subject to the non-income measure of the corporate excise.

S corporations with total receipts of $6 million or more are liable for the income measure of the corporate excise at the following rates:

  • 1.93% on net income subject to tax if total receipts are $6 million or more, but less than $9 million; or
  • 2.9% on net income subject to tax if total receipts are $9 million or more.

Financial institutions that are S corporations with total receipts of $6 million or more are taxed as a financial institution S corporations under MGL ch 63, § 2B at the following rates:

  • 2.6% on net income subject to tax if total receipts are $6 million or more, but less than $9 million; or
  • 3.9% on net income subject to tax if total receipts are $9 million or more.

All S corporations owe a minimum corporate tax of $456 regardless of profitability.

Filing requirements

Massachusetts S corporations must file a Form 355S, Form 63 FI or 355U with a Schedule S.

S corporations must also:

  • Massachusetts Schedule SK-1 for each resident and nonresident shareholder
  • Provide a Schedule SK-1 to each shareholder to inform them of their distributive shares of: 
    • Income
    • Loss
    • Deductions
    • Credit

For more information on these requirements, please refer to the Form 355S instructions.

Returns are due annually, by 15th day of the third month after the close of the S corporation's taxable year. Payment is due with the return. S corporations that have total revenues of $100,000 or more must file electronically. In addition, an S corporation must file electronically unless all of its shareholders are resident individuals. An S corporation must also file electronically if it is withholding on a shareholder’s distributive share or if it received distributive share upon which a lower-tier entity has paid withholding or estimated taxes. For more information about the E-File mandates, see TIR 16-9.

S corps that are members of a combined group may file on the 15th day of the fourth month. However,

  1. an S corp that is member of a combined group with a different taxable year must file its non-income measure return before the 15th day of the third month following the close of the S corp’s taxable year; and
  2. the informational return of an S corporation, Form 355S or Form 63 FI, including Schedules S and SK-1, remain due on or before the 15th day of the third month following the close of an S corporation’s taxable year.

This is true regardless of whether the S corp is subject to the corporate excise or the financial institutions excise. See 830 CMR 62C.11.1 for more information

Refer to Technical Information Release (TIR) 04-30 for detailed information about filing requirements. You may be required to file electronically. See TIR 16-9 for more information.

S corporations are subject to the same estimated payment requirements as corporations.

The following table shows which return each type of shareholder should file:

Type of shareholder Form to file
Full-year resident individual Form 1
Nonresident/part-year resident individual Form 1-NR/PY
Trust or estate Form 2
Domestic and foreign corporations Form 355
Domestic or foreign corporation (part of a MA Combined group) Form 355C
Corporate trust Form 3F
Domestic and Foreign S corporations Form 355S
Financial institutions that are S corporations Form 63FI
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