1120-W Instructions for Form 1120-W

2020

Department of the Treasury
Internal Revenue Service

Instructions for
Form 1120-W
Section references are to the Internal Revenue Code unless
otherwise noted.

Future Developments
For the latest information about developments affecting Form
1120-W and its instructions, such as legislation enacted after
they were published, go to IRS.gov/Form1120W.

General Instructions
Who Must Make Estimated Tax
Payments

To get more information about EFTPS or to enroll in EFTPS,
visit eftps.gov.

• Corporations must generally make estimated tax payments if

they expect their estimated tax (income tax less credits) to be
$500 or more.
• S corporations must make estimated tax payments for certain
taxes. S corporations should see the Instructions for Form
1120-S, U.S. Income Tax Return for an S Corporation, to figure
their estimated tax payments.
• Tax-exempt corporations, tax-exempt trusts, and domestic
private foundations must make estimated tax payments for
certain taxes. These entities should see the instructions for their
tax return to figure the amount of their estimated tax payments.

When To Make Estimated Tax
Payments

The installments are generally due by the 15th day of the 4th,
6th, 9th, and 12th months of the tax year. If any due date falls on
a Saturday, Sunday, or legal holiday, the installment is due on
the next regular business day.

Underpayment of Estimated Tax

A corporation that does not make estimated tax payments when
due may be subject to an underpayment penalty for the period of
underpayment. Use Form 2220, Underpayment of Estimated
Tax by Corporations, to see if the corporation owes a penalty
and to figure the amount of the penalty. See Form 2220 and the
Instructions for Form 2220.

Overpayment of Estimated Tax

A corporation that has overpaid its estimated tax may apply for a
quick refund if the overpayment is at least 10% of its expected
income tax liability and at least $500. To apply, file Form 4466,
Corporation Application for Quick Refund of Overpayment of
Estimated Tax, after the end of the tax year and before the
corporation files its income tax return. See the Instructions for
Form 4466.

Methods of Tax Payment

Some corporations (described below) are required to
electronically deposit all depository taxes, including estimated
tax payments.

Electronic Deposit Requirement

Corporations must use electronic funds transfer to make all
federal tax deposits (such as deposits of employment, excise,
Jan 27, 2020

and corporate income tax). This includes installment payments
of estimated tax. Generally, electronic funds transfer is made
using the Electronic Federal Tax Payment System (EFTPS).
However, if the corporation does not want to use EFTPS, it can
arrange for its tax professional, financial institution, payroll
service, or other trusted third party to make electronic deposits
on its behalf. Also, it may arrange for its financial institution to
initiate a same-day tax wire payment (discussed below) on its
behalf. EFTPS is a free service provided by the Department of
the Treasury. Services provided by a tax professional, financial
institution, payroll service, or other third party may have a fee.

Depositing on time. For deposits made by EFTPS to be on
time, the corporation must submit the deposit by 8 p.m. Eastern
time the day before the date the deposit is due. If the corporation
uses a third party to make deposits on its behalf, they may have
different cutoff times.
Same-day wire payment option. If the corporation fails to
submit a deposit transaction on EFTPS by 8 p.m. Eastern time
the day before the date a deposit is due, it can still make the
deposit on time by using the Federal Tax Collection Service
(FTCS). Before using the same-day wire payment option, the
corporation will need to make arrangements with its financial
institution ahead of time. Please check with the financial
institution regarding availability, deadlines, and costs. To learn
more about the information the corporation will need to provide
its financial institution to make a same-day wire payment, visit
IRS.gov/SameDayWire.
Foreign corporations. If a foreign corporation maintains an
office or place of business in the United States, it must use
electronic funds transfer (as discussed above) to make
installment payments of estimated tax.
If the foreign corporation does not maintain an office or place
of business in the United States, it may pay the estimated tax by
EFTPS if it has a U.S. bank account. The foreign corporation
may also arrange for its financial institution to submit a same-day
payment on its behalf or can arrange for either a qualified
intermediary, tax professional, payroll service, or other trusted
third party to make a deposit on its behalf using a master
account.
In addition, the foreign corporation has the option to pay the
estimated tax due by check or money order, payable to the
“United States Treasury.” To ensure proper crediting, enter the
foreign corporation's EIN, “Form 1120-F (or 1120-FSC, if
applicable) estimated tax payment,” and the tax period to which
the payment applies on the check or money order. The
payments must be sent to the Internal Revenue Service Center,
P.O. Box 409101, Ogden, UT 84409.

Refiguring Estimated Tax

If, after the corporation figures and deposits estimated tax, it
finds that its tax liability for the year will be more or less than
originally estimated, it may have to refigure its required
installments. If earlier installments were underpaid, the
corporation may owe a penalty.

Cat. No. 52102x

overpayment is credited against unpaid required installments in
the order in which the installments are required to be paid.

An immediate catchup payment should be made to reduce
the amount of any penalty resulting from the underpayment of
any earlier installments, whether caused by a change in
estimate, failure to make a deposit, or a mistake.

If the corporation uses the annualized income installment
method and/or the adjusted seasonal installment method, or is a
"large corporation," see the instructions below.

Specific Instructions

Annualized income installment method and/or adjusted
seasonal installment method. If the corporation's income is
expected to vary during the year because, for example, it
operates its business on a seasonal basis, it may be able to
lower the amount of one or more required installments by using
the annualized income installment method and/or the adjusted
seasonal installment method. For example, a ski shop, which
receives most of its income during the winter months, may be
able to benefit from using one or both of these methods in
figuring one or more of its required installments.
To use one or both of these methods, complete Schedule A.
If Schedule A is used for any payment date, it must be used for
all payment due dates. To get the amount of each required
installment, Schedule A automatically selects the smallest of (a)
the annualized income installment (if applicable), (b) the
adjusted seasonal installment (if applicable), or (c) the regular
installment under section 6655(d)(1) (increased by any
recapture of a reduction in a required installment under section
6655(e)(1)(B)).

All line references on Form 1120-W are references to
Form 1120, U.S. Corporation Income Tax Return. All
CAUTION other entities must determine their estimated tax liability
by using the applicable line from their income tax return and the
maximum rate that is in effect for their applicable tax year.

!

Lines 1 and 2

Corporations, including qualified personal service corporations
and members of a controlled group, are taxed at a flat rate of
21% of taxable income. Multiply the expected taxable income
from line 1 by 21%. Enter this amount on line 2.

Line 3. Tax Credits

For information on tax credits the corporation can take, see the
Instructions for Form 1120, Schedule J, Part I, lines 5a through
5e, or the instructions for the applicable lines and schedule of
other income tax returns.

Line 5. Other Taxes

Line 9a. 2019 Tax

Large corporations. A large corporation is a corporation that
had, or whose predecessor had, taxable income of $1 million or
more for any of the 3 tax years immediately preceding the 2020
tax year, or if less, the number of years the corporation has been
in existence. For this purpose, taxable income is modified to
exclude net operating loss and capital loss carrybacks or
carryovers.
Large corporations figure the amount to enter on line 11 as
follows. If Schedule A is used, also follow these instructions to
figure the amounts to enter on Schedule A, Part III, line 35.
• If line 8 is smaller than line 9a: Enter 25% of line 8 in columns
(a) through (d) of line 11.
• If line 9a is smaller than line 8: Enter 25% of line 9a in column
(a) of line 11. In column (b), determine the amount to enter as
follows:
1. Subtract line 9a from line 8,
2. Add the result to the amount on line 8, and
3. Multiply the result in 2 above by 25% and enter the result
in column (b). Enter 25% of line 8 in columns (c) and (d).

If a return was not filed for the 2019 tax year showing a
liability for at least some amount of tax or the 2019 tax year was
for less than 12 months, do not complete line 9a. Instead, skip
line 9a and enter the amount from line 8 on line 9b.

If only the adjusted seasonal installment method (Part I) is used,
complete Parts I and III of Schedule A. If only the annualized
income installment method (Part II) is used, complete Parts II
and III. If both methods are used, complete all three parts. Enter
in each column on page 1, Part I, line 11, the amounts from the
corresponding column of line 38. If Schedule A is used for any
payment date, it must be used for all payment dates.

Other taxes include the base erosion minimum tax amount and
any recaptured tax credits. For information on other taxes the
corporation may owe, see the Instructions for Form 1120,
Schedule J, Part I, line 9, or the instructions for the applicable
line and schedule of other income tax returns.

Line 7. Credit for Federal Tax Paid on
Fuels and Other Refundable Credits

See Form 4136, Credit for Federal Tax Paid on Fuels, to find out
if the corporation qualifies to take this credit. Also include on
line 7 any other refundable credit, including any credit the
corporation is claiming under section 4682(g)(2) for tax on
ozone-depleting chemicals. For information on other refundable
credits, see the Instructions for Form 1120, Schedule J, or the
instructions for the applicable line or schedule of other income
tax returns.

Schedule A

Figure the corporation's 2019 tax in the same way that line 8 of
this worksheet was figured, using the taxes and credits from the
2019 income tax return. See the instructions for the 2019 Form
1120. Large corporations, see the instructions for line 11 below.

Line 10. Installment Due Dates

!

Calendar-year taxpayers: Enter 4-15-2020, 6-15-2020,
9-15-2020, and 12-15-2020, respectively, in columns (a) through
(d). If the due date falls on a Saturday, Sunday, or legal holiday,
enter the next business day.

Do not figure any required installment until after the end
of the month preceding the due date for that installment.

CAUTION

Extraordinary items. Generally, under the annualized income
installment method, extraordinary items must be taken into
account after annualizing the taxable income for the
annualization period. Similar rules apply in determining taxable
income under the adjusted seasonal installment method. An
extraordinary item includes:
• Any item identified in Regulations section 1.1502-76(b)(2)(ii)
(C)(1), (2), (3), (4), (7), and (8);
• A net operating loss carryover;
• A section 481(a) adjustment; and

Fiscal-year taxpayers: Enter the 15th day of the 4th, 6th,
9th, and 12th months of your tax year in columns (a) through (d).
If the due date falls on a Saturday, Sunday, or legal holiday,
enter the next business day.

Line 11. Required Installments

Payments of estimated tax should reflect any 2019 overpayment
that the corporation chose to credit against its 2020 tax. The
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Instructions for Form 1120-W (2020)

• Net gain or loss from the disposition of 25% or more of the fair
market value of the corporation's business assets during the tax
year.
These extraordinary items must be accounted for in the
appropriate annualization period. However, a net operating loss
deduction and a section 481(a) adjustment (unless the
corporation makes the alternative choice under Regulations
section 1.6655-2(f)(3)(ii)(C)) are treated as extraordinary items
occurring on the first day of the tax year in which the item is
taken into account in determining taxable income.
De minimis rule. Extraordinary items identified above that
are less than $1,000,000 (other than a net operating loss
carryover or a section 481(a) adjustment) may be annualized
using the general rules of Regulations section 1.6655-2(f), or if
the corporation chooses, may be taken into account after
annualizing the taxable income for the annualization period.
For more information regarding extraordinary items, see
Regulations section 1.6655-2(f)(3)(ii) and the examples in
Regulations section 1.6655-2(f)(3)(vii). Also see Regulations
section 1.6655-3(d)(3).

Line 15. Reserved
Line 16. Other Taxes

For the same taxes used to figure page 1, Part I, line 5, figure the
amounts for the months shown in the column headings above
line 1.

Line 18. Credits

Enter the credits to which the corporation is entitled for the
months shown in the column headings above line 1.

Part II. Annualized Income Installment
Method
Line 20. Annualization Periods

Enter in the space on line 20, columns (a) through (d),
respectively, the annualization periods that the corporation is
using, based on the options listed below. For example, if the
corporation elects Option 1, enter on line 20, the annualization
periods 2, 4, 7, and 10, in columns (a) through (d), respectively.

Part I. Adjusted Seasonal
Installment Method

Use Option 1 or Option 2 only if the corporation elected
to use one of these options by filing Form 8842, Election
CAUTION To Use Different Annualization Periods for Corporate
Estimated Tax, on or before the due date of the first required
installment payment. Once made, the election is irrevocable for
the particular tax year.

!

Complete this part only if the corporation's base period
percentage for any 6 consecutive months of the tax year equals
or exceeds 70% (0.70). Figure the base period percentage using
the 6-month period in which the corporation normally receives
the largest part of its taxable income. The base period
percentage for any period of 6 consecutive months is the
average of the three percentages figured by dividing the taxable
income for the corresponding 6-consecutive-month period in
each of the 3 preceding tax years by the taxable income for each
of their respective tax years.
Example. An amusement park with a calendar year as its tax
year receives the largest part of its taxable income during the
6-month period from May through October. To compute its base
period percentage for this 6-month period in 2020, the
amusement park figures its taxable income for each May–
October period in 2017, 2018, and 2019. It then divides the
taxable income for each May–October period by the total taxable
income for that particular tax year. The resulting percentages are
69% (0.69) for May–October 2017, 74% (0.74) for May–October
2018, and 67% (0.67) for May–October 2019. Because the
average of 69%, 74%, and 67% is 70%, the base period
percentage for May through October 2020 is 70%. Therefore,
the amusement park qualifies for the adjusted seasonal
installment method.

1st
Installment

2nd
Installment

3rd
Installment

4th
Installment

Standard option

3

3

6

9

Option 1

. . . . .

2

4

7

10

Option 2

. . . . .

3

5

8

11

Line 21. Taxable Income

If a corporation has income includible under section 951(a)
(controlled foreign corporation income), special rules apply.
Amounts includible in income under section 951(a) must
generally be taken into account in figuring the amount of any
annualized income installment as the income is earned. The
amounts are figured in a manner similar to the way in which
partnership income inclusions are taken into account in figuring
a partner's annualized income installments as provided in
Regulations section 1.6654-2(d)(2).

Line 2

Safe harbor election. Corporations may be able to make a
prior-year safe harbor election. Under the election, an eligible
corporation is treated as having received ratably during the tax
year items of income under section 951(a) equal to 115% (100%
for a noncontrolling shareholder) of the amounts shown on the
corporation's return for the first preceding tax year (the second
preceding tax year for the first and second required
installments).
For more information, see section 6655(e)(4)(B) and
Regulations section 1.6655-2(f)(3)(v)(B)(2).

If the corporation has certain extraordinary items, special rules
apply. Do not include on line 2 the de minimis extraordinary
items that the corporation chooses to include on line 9b. See
Extraordinary items above.

Line 9b

If the corporation has extraordinary items of $1,000,000 or more,
a net operating loss deduction, or a section 481(a) adjustment,
special rules apply. Include these amounts on line 9b for the
appropriate period. Also include on line 9b the de minimis items
that the corporation chooses to exclude from line 2. See
Extraordinary items above.

Extraordinary items. If the corporation has extraordinary
items, special rules apply. Do not include on line 21 the de
minimis extraordinary items that the corporation chooses to
include on line 23b. See Extraordinary items, earlier.

Line 10

Figure the tax on the amount on line 9c by following the same
steps used to figure the tax on Form 1120-W, page 1, line 2.

Line 22. Annualization Amounts

Enter the annualization amounts for the option used on line 20.
For example, if the corporation elects Option 1, enter on line 22,
Instructions for Form 1120-W (2020)

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the annualization amounts 6, 3, 1.71429, and 1.2, in columns (a)
through (d), respectively.
1st
Installment

2nd
Installment

3rd
Installment

4th
Installment

Standard option

4

Option 1

. . . . .

6

4

2

1.33333

3

1.71429

1.2

Option 2

. . . . .

4

2.4

1.5

1.09091

example, complete lines 34 through 38 in column (a) before
completing line 33 in column (b).

Line 35

“Large corporations,” see the instructions for page 1, line 11, for
the amount to enter.

Line 38. Required Installments

For each installment, enter the smaller of line 34 or line 37 on
line 38. Also enter the result on page 1, Part I, line 11.
Paperwork Reduction Act Notice. Your use of this form is
optional. It is provided to aid the corporation in determining its
tax liability.

Line 23b

If the corporation has certain extraordinary items of $1,000,000
or more, a net operating loss deduction, or a section 481(a)
adjustment, special rules apply. Include these amounts on
line 23b. Also include on line 23b the de minimis extraordinary
items that the corporation chooses to exclude from line 21. See
Extraordinary items, earlier.

You are not required to provide the information requested on
a form that is subject to the Paperwork Reduction Act unless the
form displays a valid OMB control number. Books or records
relating to a form or its instructions must be retained as long as
their contents may become material in the administration of any
Internal Revenue law. Generally, tax returns and return
information are confidential, as required by section 6103.

Line 24

Figure the tax on the amount in each column on line 23c by
following the same steps used to figure the tax on Form 1120-W,
page 1, line 2.

The time needed to complete and file this form will vary
depending on individual circumstances. The estimated burden
for business taxpayers filing this form is approved under OMB
control number 1545-0123 and is included in the estimates
shown in the instructions for their business income tax return.

Line 25. Reserved
Line 26. Other Taxes

If you have comments concerning the accuracy of these time
estimates or suggestions for making this form simpler, we would
be happy to hear from you. You can send us comments through
IRS.gov/FormComments. Or you can write to the Internal
Revenue Service, Tax Forms and Publications Division, 1111
Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not
send the tax form to this office. Instead, keep the form for your
records.

For the same taxes used to figure line 5 of Form 1120-W, figure
the amounts for the months shown on line 20.

Line 28. Credits

Enter the credits to which the corporation is entitled for the
months shown in each column on line 20. Do not annualize any
credit. However, when figuring the credits, annualize any item of
income or deduction used to figure the credit.

Part III. Required Installments
Line 33

Before completing line 33 in columns (b) through (d), complete
lines 34 through 38 in each of the preceding columns. For

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Instructions for Form 1120-W (2020)