Partnerships
A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business.
A partnership must file an annual information return to report the income, deductions, gains, losses, etc., from its operations, but it does not pay income tax. Instead, it “passes through” any profits or losses to its partners. Each partner includes his or her share of the partnership’s income or loss on his or her tax return.
Partners are not employees and should not be issued a Form W-2. The partnership must furnish copies of Schedule K-1 (Form 1065) to the partners by the date Form 1065 is required to be filed, including extensions.
If you are a partnership or a partner (individual) in a partnership, use the information in the charts below to help you determine some of the forms that you may be required to file.
Chart 1 (Partnership)
| If you are a partnership then you may be liable for… | Use Form… |
| Annual return of income | 1065,U.S. Return of Partnership Income (PDF) |
Employment taxes:
|
941, Employer’s Quarterly Federal Tax Return (PDF) and 943, Employer’s Annual Federal Tax Return for Agricultural Employees (for farm employees) (PDF)940, Employer’s Annual Federal Unemployment (FUTA) Tax Return (PDF) 8109-B, Federal Tax Deposit Coupon (PDF) |
| Excise Taxes | Refer to the Excise Tax Web page |
Chart 2 (Individual Partners in a Partnership)
| If you are a partner (individual) in a partnership then you may be liable for… | Use Form… |
| Income Tax | 1040, U.S. Individual Income Tax Return (PDF) and Schedule E (Form 1040), Supplemental Income and Loss (PDF) |
| Self-employment tax | 1040, U.S. Individual Income Tax Return (PDF) and Schedule SE (Form 1040), Self-Employment Tax (PDF) |
| Estimated tax | 1040-ES, Estimated Tax for Individuals (PDF) |
References/Related Topics
- Election for Husband and Wife Unincorporated Businesses
- Husband and Wife Business
- IR-2005-143, IRS Extends Transition Relief to Partnerships and Pass-Thru Entities Under New Code Section
- IR-2005-146, IRS Releases Schedule M-3 for Partnerships
- Other Useful Forms for Partnerships
- Publication 541, Partnerships
- Publication 583, Starting a Business and Keeping Records
Emil Estafanous, CPA provides an integrated suite of tax preparation, tax planning, tax advocacy, payroll, QuickBooks mentoring and financial planning services for businesses and individuals.
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