Income Tax for S Corporations
A corporation filing as an S corporation for federal income tax purposes must file Idaho Form 41S if either of the following are true:
- You're doing business in Idaho.
- You're registered with the Idaho Secretary of State to do business in Idaho.
Idaho accepts the federal approval of the S corporation election. Include a copy of the federal approval or a federal Form 2553 with your Form 41S the first year you file.
Doing business in Idaho includes, but isn't limited to, the following activities:
- You own or lease, as a lessor or lessee, any property in Idaho.
- You solicit business in Idaho.
- You're a member of a partnership or S corporation with business in Idaho.
- You have any Idaho activity from which you receive, realize or derive income.
- You have an agent — such as a collector, repair person, or delivery person — acting on your behalf in Idaho.
An S corporation under the protection of Public Law 86‑272 is exempt from filing an Idaho income tax return.
Other business entities
Still not sure if you should file a business income tax return as a corporation? Explore the other business entity types that must file an Idaho tax return:
- The current Idaho tax rate on taxable business income is 6.5%.
Tax due for nonresident individual shareholders
An S corporation is required to pay pass-through withholding on a nonresident individual shareholder's income from that S corporation. This income includes wages, salaries, any other compensation, and the individual's share of income, loss or deductions.
If an S corporation chooses not to withhold, they have two other options:
- Composite return—the S corporation pays the tax for the individual owner on the entity's return at the corporate rate.
- Nonresident Owner Agreement—the individual owner can submit a signed agreement (Form PTE-NROA) to the S corporation and the S corporation doesn't include the individual in a composite return or pay withholding to the Tax Commission on the owner's behalf.
S corporations that pay tax for individual shareholders on a composite return can't take all the same deductions that Idaho allows on an individual return. For example, S corporations aren't allowed deductions for carryovers or carrybacks of net operating losses, capital losses, or personal exemptions.
These provisions apply to an S corporation that's doing business in Idaho.
See additional information, including Forms PTE-12 and PTE-01, on our Pass‑through Entity page.
What to file
Include a complete copy of your federal income tax return with your Idaho business income tax return.
Assembling your tax return
To make sure your return is correctly processed, include all forms and schedules in the following order:
- Form 41S, pages 1 and 2
- Form 42
- Form 75
- Form 44
- Form PTE-12, if applicable
- Form(s) ID K-1, if applicable
- Additional schedules in alphabetical order
- Additional forms in numerical order
- Complete copy of federal return
Use Form 41S to amend your Idaho income tax return. Make sure you check the Amended Return box and enter the reason for amending.
If you amend your federal return, you must file an amended Idaho return. The Idaho statute of limitations for receiving a refund is three years from the due date of the return or the date you filed the return, whichever is later.
When to file
File your Idaho income tax return on or before the 15th day of the fourth month following the close of your tax year. For a calendar year filer, this is April 15. If the last day for filing a return falls on a Saturday, Sunday, or legal holiday, the return is on time if you file it on the next business day.
Please contact us if you forgot to file a tax return.
Learn more on our Valid Extension for Filing page.
Penalties and interest
Learn more on our Penalties and Interest page.
Where to file
E-file your return
The Tax Commission, with the IRS, allows electronic filing of federal and state business income tax returns. To see a list of software companies that provide this service, visit our Filing Business Income Taxes Online page.
Mail your return
Visit our E-pay page for more information about electronic payments.
Idaho follows federal regulations on the following items:
- Accounting methods and period: Any changes must have prior approval from the IRS. Include a copy of the federal approval with your return.
- Bonus depreciation for property acquired during 2008 and 2009: Learn more on our Bonus Depreciation page.
- Check-the-box regulations: If an entity is classified or taxed as a corporation for federal income tax purposes, it's treated as a corporation for Idaho income tax purposes.
- Disregarded entities: If an entity is classified as a disregarded entity for federal tax purposes, it's treated as a disregarded entity for Idaho income tax purposes. Your return must have a schedule listing the names and federal identification numbers of disregarded entities included in your return. This is separate from the Idaho Form 41A. The total of the apportionment attributes of the disregarded entity is included in the owner's Idaho apportionment factor.
- Qualified Subchapter S Subsidiaries (QSSS): Idaho treats a QSSS in the same manner as the IRS. The total of the apportionment attributes of the QSSS is included in the parent S corporation's Idaho apportionment factor.
If your federal taxable income or tax credits change because of a federal audit, you must send written notice to the Tax Commission within 120 days of the final federal determination (see Rule 890). Include copies of all IRS schedules.
- If you owe more Idaho tax and don't send the written notice within 120 days, we will apply a 5% penalty and charge interest on the tax due.
- If you're owed an Idaho refund, you must file an amended Idaho income tax return to get the refund. The Idaho statute of limitations for receiving a refund is three years from the due date of the return or the date you filed the return, whichever is later. If the statute-of-limitations period has ended, you have one year from the date of the final determination to file for the refund.
Net operating loss (NOL)
Idaho doesn't allow an S corporation to take a deduction for an NOL carryback or carryforward. The S corporation must pass the loss through to the shareholders so they can take the deduction on their individual income tax return. (See the Pass‑Through Entities page).
An S corporation can't use the combined reporting method.
Visit the Income Tax Hub for links to related guides.
Keep copies of your tax returns and all supporting documents for at least seven years. Visit the IRS website for more information about record keeping.
Laws and rules
Learn more about Idaho business income tax: