Key takeaways
- An Indiana S corporation files Form IT-20S in addition to the federal Form 1120-S, and the state return carries the nonresident shareholder tax.
- A calendar-year 2026 federal return is due March 15, 2027, and Indiana's nonresident remittance voucher follows the 15th day of the 4th month, so April 15, 2027.
- The PTET election is made each year on the IT-20S and cannot be added after the original return is filed.
- Collect shareholder state and county of residence and any IN-COMPA paperwork before the books close, not in March.
What the entity files in Indiana
A corporation with a valid federal S election (Form 2553, signed by all shareholders) files the federal Form 1120-S and a Schedule K-1 for each shareholder. In Indiana the state counterpart is Form IT-20S. The nonresident shareholder tax and the PTET election both live on that return, so treat it as more than a copy of the federal numbers.
Do not describe it to a client as a no-tax return. The entity can owe tax at the entity level in two ways: composite tax or withholding on nonresident shareholders, and PTET if it elects that. Resident individual shareholders report their share on their own Indiana return.
If the corporation files 10 or more returns of any type in a calendar year, the IRS requires Form 1120-S to be e-filed. Count the Forms W-2 and 1099 the client issues before telling an owner paper is fine.
Due dates for tax year 2026
Federally, an S corporation files Form 1120-S by the 15th day of the 3rd month after year end. For the 2025 calendar-year return that was March 16, 2026, because March 15 fell on a Sunday. For the 2026 return the date is March 15, 2027, a Monday. Form 7004 extends the filing date by six months if it is filed by that regular due date.
Indiana's nonresident remittance voucher, Form IT-6WTH, is due on the 15th day of the 4th month after the corporate year closes. For a calendar-year entity that is April 15, so April 15, 2027 for the 2026 return. Put it on the calendar next to March 15, because the state payment does not move with the federal extension.
An extension of time to file does not extend the time to pay. Payments after the original date carry penalty and interest, so estimate any composite tax or PTET before the extension is filed. Check the current IT-20S instruction booklet for how Indiana treats a federal Form 7004 on the state return.
Late-filing exposure is easy to explain with numbers. For a 2025 federal return, the Form 1120-S penalty is $255 per shareholder per month, up to 12 months. Indiana adds its own penalty: for a corporate or partnership return showing zero tax, the DOR lists $10.00 per day up to $250.00, and for unpaid tax it lists 10% of the unpaid tax or $5.00, whichever is greater.
Nonresident shareholders: composite tax or withholding
This is where Indiana S corporation returns go wrong. If any shareholder lives outside Indiana, the entity generally pays tax for that shareholder through composite filing, reported on Schedule Composite attached to the IT-20S. The payment is made with Form IT-6WTH, and no voucher is needed if no tax is due for the composite members.
An individual nonresident shareholder who does not want to be in the composite files Form IN-COMPA, and the DOR's withholding page describes those members as left out of the composite tax. Indiana's guidance on opting out has not been consistent across booklets, so read the current IT-20S instructions before you promise a client that a shareholder can opt out.
County tax is separate. The DOR booklets have treated a nonresident, for county purposes, as someone living outside the county where the S corporation is located, so a shareholder in another Indiana county can matter. Ask for each shareholder's county of residence, not only the state.
If a shareholder is an entity that received a pass-through share from another entity, the withholding that came through is reported on its own line and Form IN K-1 from the paying entity must be enclosed.
The PTET election for 2026
Indiana's pass-through entity tax is available to S corporations and partnerships. It is not available to C corporations, trusts or sole proprietorships. The rate equals the individual income tax rate for the year: 3.05% for 2024 and 3.00% for 2025. The DOR lists 2.95% as the individual rate for 2026, but its PTET page showed no 2026 PTET rate when I checked, so confirm the figure before quoting it.
The election is made every year and does not carry forward. For 2023 and later, Form IN-PTET is not used. The entity checks the PTET box on page 1 of the IT-20S and completes Schedule PTET. The DOR says you cannot make the election after the original return is filed, so the decision belongs in the preparation meeting, not in an amended return.
PTET replaces composite tax up to the amount of PTET owed. The DOR's own example is a nonresident corporate owner: 4.9% composite for 2023 against 3.15% PTET. County tax on Schedule Composite is not replaced, so a PTET entity can still owe composite county tax.
For tax year 2026, estimated PTET payments for a calendar-year entity fall on April 20, June 20, September 20 and December 20, moving to the next business day on a weekend. December 20, 2026 is a Sunday. For 2025 and later the DOR does not want the estimated tax penalty self-reported and will assess it itself.
What to ask the client for in November
Send the request now so the answers exist before the 2026 books close. Ask, for each shareholder who owned stock at any point in 2026, for the full legal name, address on January 1, 2027, county and state of residence, percentage owned and dates of any ownership change.
Then ask for the items that change the entity's tax: any Form IN-COMPA a nonresident shareholder signed, the prior-year IT-20S with Schedule Composite, the 2025 PTET election, and any estimated PTET or IT-6WTH payments made in 2026 with dates and confirmations.
Decision rule: if a shareholder is a trust, LLC or another corporation, ask for its tax form and state of formation. If it passed income through from another entity, ask for that Form IN K-1. If a shareholder moved during 2026, ask for the move date, because the part-year split changes who is a nonresident.
Also collect the federal pieces: the year-end trial balance, payroll reports with Forms W-2, the 1099 filings, shareholder loan and basis records, distributions by date, and the Form 2553 acceptance letter if the election is recent.
Where firms lose time
The usual failure is a shareholder who moves out of state in 2026 and never tells the firm. The IT-20S is then prepared with no composite schedule, and the owner gets a notice later. Add a standing line to the year-end request asking whether any owner moved, sold shares or was added.
The second failure is a PTET decision made after filing. Run the comparison in December: composite tax on the nonresident share against PTET, then ask the shareholders' own preparers whether their home state credits it. The DOR points a nonresident owner whose state does not credit PTET to Form IT-40PNR for a refund.
If the firm tracks these requests in Usual, the useful part is the shareholder list: send a document request, collect the signed IN-COMPA and prior IT-20S in one place and see which shareholders have not responded. The tax calculation stays in your preparation software.