Partnership tax returns may seem intimidating, but filing one doesn’t have to be that complicated. Here's what you'll need to know to get started.

Get started Ask a Lawyer a Question You'll hear back in one business day.

How Do Tax Returns for Partnerships Work?

Partnership business entities are not taxed themselves; instead, the partners are taxed. However, you’ll still generally need to file a partnership tax return with IRS Form 1065. This particular form includes the various IRS schedules that you can use to determine the amount that the partners must pay. Most of the in-depth information is filled out on Schedule K-1. Once complete, these forms should be sent in to the IRS as soon as possible. In general, this partnership tax return should be submitted before the partners’ individual tax returns. But if you do it out of order, don’t worry. It just means that your tax return may be delayed since the IRS will cross reference the partnership tax return with the partners' individual tax returns.

How Do Partners File Their Own Tax Returns?

After the partnership tax return is filed, the partners need to prepare their own individual tax returns using Form 1040 and Schedule E. The amounts paid should correspond to the estimated quarterly taxes from the partnership.

As a partner, you’ll probably also need to pay estimated taxes. To estimate your likely tax payments at the beginning of the year, approximate your total income for the upcoming business year and divide it by four. These payments should then be mailed in to the IRS in April, July, October, and January, on the 15 of each month. The estimated tax payments must be at least 90 percent of the actual revenue realized for the current tax year. This means that if your partnership starts doing better than anticipated, you'll need to amend the estimated tax payments to cover the difference. Otherwise, you'll be penalized anywhere from one to 15 percent of your total revenue.

For more questions about your business’ tax and other liabilities, contact a lawyer.

Get started Ask a Lawyer a Question You'll hear back in one business day.

Get started Ask a Lawyer a Question You'll hear back in one business day.