Partnership Income Tax Guide
Partnership Tax Forms, Tax Filing Information
Change in Partnership Tax Return Due Date
The due date for income taxes for partnerships and multiple-member LLC's taxed as partnerships is March 15. If March 15 falls on a weekend or holiday, the return is due the next business day. Check this article about business tax due dates for the current year to get the exact date. This partnership return information is also for multiple-member LLC's, which file their business tax returns as partnerships.
If you file an application to extend your partnership tax return, it must be filed by March 15, and taxes (estimated) must be paid by that date. You have six months to file the return, which is due September 15. If you file an extension, you must still pay the income tax by the original due date; payment is not extended.
U.S. Partnerships and Income Taxes
This guide will take you through the top pieces of information to help you prepare for partnership taxes, including types of partnerships and how they are taxed, when and where to file, which form to use, and estimating partnership taxes.
Before you enlist the help of a CPA, Enrolled Agent, or other qualified tax preparer to prepare your partnership's taxes, there is some basic information about partnership taxes you should know. Read more about Getting Help with Business Taxes.
Multiple-member LLC's are taxed as partnerships
The information provided in this tax guide is also applicable to multiple-member limited liability companies, which are taxed as partnerships for federal income tax purposes. Read more about how LLCs pay income taxes.
Types of Partnerships
Several different types of partnerships may be formed, depending on the preferences of the partners. A partnership can be formed as a general partnership, with all partners participating in the management, or it may have limited partners. A limited liability partnership may also be formed. All partnership types file federal income tax using the forms described below; how the individual partners are taxed depends on the type of partnership and the specific details of the partnership agreement. Read more about types of partnerships.
Partnership Federal Income Tax Forms
Partnerships file their federal income tax returns using Form 1065. Form 1065 is an information return, meaning that no tax is imposed directly on the partnership based on information in Form 1065.
The partnership must also prepare a Schedule K-1 to give to each partner, showing that partner's distribution of the profits or losses of the partnership for that year. The Schedule K-1 is filed with the individual partner's personal income tax return for the year, and the total from the Schedule K-1 is recorded in Line 12 - Business Income. Individual partners pay income taxes on their share of the profits for the partnership. The partners must also pay self-employment tax (Social Security/Medicare) based on their share of profits, each year.
Tax Filing Documents Needed for Partnership Income Tax Return
To file your partnership income taxes, you will need to provide some financial reports and other documents to your tax preparer. These documents include a balance sheet for the beginning of the partnership's fiscal year and the end of that year, a profit and loss statement for the end of the year, information to calculate cost of goods sold, and other documents. Here is a list of the documents needed to prepare a partnership income tax return.
Where and How to File Partnership Income Taxes
You can file your partnership tax return on Form 1065 by mail or you can have your tax preparer e-file the return. If you are filing by mail, the address for sending in your federal tax return for a partnership depends on your state. See page 4 of instructions for Form 1065 for the mailing address for your state.
State Partnership Taxes
Partners must pay income taxes on their distribution of profit in a partnership in the state or states where the partnership is located. Partnership taxes are paid on the individual partner's personal state tax returns.
More on Partnership Taxes from the IRS
The IRS web page titled Partnerships includes a description of the taxes paid by partnership businesses and the individual partners. It's worth a look if you are confused.