Form 1120-F is the US income tax return a foreign corporation files when it's engaged in a US trade or business, has income treated as effectively connected with one, or has US-source income whose tax wasn't fully covered by withholding. It's also the form for claiming a refund of US tax withheld. A foreign corporation with a US office generally files by the 15th day of the 4th month after its year ends; one without a US office has until the 15th day of the 6th month.
Everything below comes from the IRS 2025 Instructions for Form 1120-F, as of October 2026.
Who has to file
Unless an exception applies, a foreign corporation must file if, during the tax year, it:
- was engaged in a trade or business in the United States, whether or not it had US-source income from it and whether or not a treaty exempts that income
- had income, gains or losses treated as effectively connected with a US trade or business
- wasn't engaged in a US trade or business but had US-source income and its tax wasn't fully satisfied by withholding at source
- was, or had a branch that was, a qualified derivatives dealer
It's also required when the corporation claims a refund, claims any deductions or credits, or takes a treaty position that has to be disclosed on Form 8833. A corporation with no gross income because of a treaty or Code exemption still files, completing the identifying information and a statement of the exclusions claimed.
Due dates and extensions
| Situation | Due date | Extension |
|---|---|---|
| US office or place of business | 15th day of the 4th month after the tax year ends | Form 7004 by that date |
| Fiscal year ending June 30 (with a US office) | 15th day of the 3rd month after the year ends | Form 7004 by that date |
| No US office or place of business | 15th day of the 6th month after the tax year ends | Form 7004 by that date |
If a due date lands on a weekend or legal holiday, file on the next business day. The extension request goes on Form 7004. Paper returns go to the Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409.
The 18-month rule that protects deductions
This is the part people miss. A foreign corporation only gets to take deductions and credits against its effectively connected income if Form 1120-F is filed on time and accurately, and for this purpose a return is generally treated as timely if it's filed no later than 18 months after the due date of the current year's return. Miss that window and the tax is figured on gross income, with only a short list of items still allowed:
- the charitable contributions deduction
- the credit from Form 2439
- the credit for federal tax on fuels
- US income tax paid or withheld at source
The instructions note the deadline can be waived in limited cases where the corporation shows it acted reasonably and in good faith.
Protective returns
If a foreign corporation's US activity is limited and it decides that activity doesn't create effectively connected income, the instructions say it should still file a protective return. The same goes for a corporation that decides a treaty means it owes no US tax, for example because its income isn't attributable to a US permanent establishment. The protective return keeps its right to deductions and credits if that view later turns out to be wrong. A corporation that doesn't file loses that right.
How the tax is worked out
| Income type | How it's taxed |
|---|---|
| Effectively connected income (ECI) | At the same 21% rate that applies to domestic corporations |
| Fixed or periodic US-source income not connected with a US business (Section I) | Generally at a 30% rate, or a lower treaty rate where one applies |
| After-tax earnings of the US branch not reinvested | A 30% branch profits tax under section 884(a), unless a treaty changes it |
Much of the Section I income has already had tax withheld on Form 1042-S. When withholding covered the full liability and there's no US business, filing is usually only needed to claim a refund, and the instructions set out a simplified procedure for that.
Signing, amending and refund-only returns
The return must be signed and dated by the president, vice president, treasurer, assistant treasurer, chief accounting officer or another corporate officer authorized to sign, such as a tax officer. A receiver, trustee or assignee signs instead when they file for the corporation. An amended Form 1120-F can only follow an original one, and it generally has to be filed within 3 years after the original was filed or within 2 years after the tax was paid, whichever is later. A return filed before its due date counts as filed on the due date.
Want AI doing the heavy lifting in your marketing?
I build the systems that handle the boring 80 percent, so you get your week back. Done properly, with the human kept in.
A corporation that only wants back tax withheld at source uses the simplified procedure: page 1 identification and refund lines, the applicable items on pages 2 and 3, and Section I on page 4 showing the gross income, the correct rate and the tax that was withheld.
Penalties
A corporation that files late, including extensions, can be charged 5% of the unpaid tax for each month or part of a month, up to 25%. For a return required to be filed in 2026 that's more than 60 days late, the minimum penalty is the smaller of the tax due or $525. Paying late can cost 1/2 of 1% of the unpaid tax a month, also capped at 25%. Both can be removed for reasonable cause, and the instructions say not to attach an explanation with the return: wait for a notice, then reply.
The verdict
If a foreign company does anything in the US beyond passive investment, file Form 1120-F every year, even when you believe a treaty or the facts mean no US tax is owed. The protective return costs little; losing every deduction because you missed the 18-month window can cost the whole margin.
Frequently asked questions
Who must file Form 1120-F?
A foreign corporation engaged in a US trade or business, with income treated as effectively connected with one, with US-source income not fully covered by withholding, or claiming a refund, deductions or credits.
When is Form 1120-F due?
Generally the 15th day of the 4th month after the tax year ends if the corporation has a US office, or the 15th day of the 6th month if it doesn't.
What is a protective Form 1120-F?
A return filed by a foreign corporation that believes it has no effectively connected income or no US tax because of a treaty, to keep its right to deductions and credits if that view is later found wrong.
What happens if Form 1120-F is filed more than 18 months late?
The return is generally not treated as timely for deductions and credits, so most deductions against effectively connected income are lost unless the IRS waives the deadline.
Where do I mail Form 1120-F?
To the Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409.
