taxes

Filing taxes on a partnership

George Saenzq_v2.gifDear Tax Talk,
We have a part-time business. We have a two-man partnership. Our income for the entire year was $13,000. What partnership tax forms should I file?
--Richard

a_v2.gifDear Richard,
Partnerships are required to file Form 1065 annually by April 15 of the following tax year. Form 1065 is an information return, as the partnership does not pay income tax, but rather distributes it to its partners, who pay any corresponding taxes.

Recently expanded from four to five pages, Form 1065 can be fairly straightforward for experienced preparers, or gut-wrenching for the novice. If you're thinking of preparing the tax return yourself, I suggest you buy a tax program to help you ensure its completeness.

For example, in completing Form 1065, you're required to include a Schedule K-1 for each partner. You may also be required to complete self-employment net earnings. These additional steps are usually covered by a tax software program that retails for around $100 and will help you stay out of trouble with the IRS in processing the tax return.

The income from the partnership is required to be reported by the partners. The income reported on each partner's Schedule K-1 would then be transferred to Schedule E, page 2 of the partner's individual income tax return.

To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Taxpayers should seek professional advice based on their particular circumstances.

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
MORTGAGE HOME EQUITY AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed 4.28%  0.02 4.30%
15 year fixed 3.24%  0.06 3.18%
5/1 ARM 3.41%  0.12 3.53%
 
View Rates in your area Next
Product Rate Change Last week
30K FICO-based HELOC 4.36%  0.02 4.34%
50K FICO-based HELOC 4.06% --0.00 4.06%
100K FICO-based HELOC 3.91% --0.00 3.91%
 
View Rates in your area Next
Product Rate Change Last week
60 month used car loan 2.69% --0.00 2.69%
48 month used car loan 2.92% --0.00 2.92%
60 month new car loan 3.19%  0.01 3.18%
 
View Rates in your area Next
Product Rate Change Last week
1 Year CD 0.93%  0.03 0.90%
2 Year CD 1.13%  0.04 1.09%
5 Year CD 1.76%  0.00 1.76%
 
View Rates in your area Next
Product Rate Change Last week
Balance Transfer Cards 15.71%  0.02 15.69%
Cash Back Cards 16.41%  0.01 16.40%
Low Interest Cards 10.86% --0.00 10.86%
 
Next
DAILY TAX TIP NEWSLETTER

Get expert advice during tax season on tax preparation and tips for cutting your tax bill.

advertisement

Connect with us