Partnership Tax Returns
Partnership Tax Returns
Partnerships file a separate return, form 1065, and generally require accurate bookkeeping and file quarterly Payroll taxes. Good administrative paperwork is important. State partnership returns are also required in some states. Our training, expertise and the computer software we use at Torchlight allows us to do these anywhere in the US. The federal partnership tax return 1065 is done first. Then the state partnership tax returns is done, if needed, drawing needful data from the 1065. Then unique questions for each state partnership return are then addressed and handled by our EAs and CPAs.
To file a partnership tax return, a profit and loss statement is usually furnished by the tax professional. Accurate data on income and expenses is needful. And the partnership must pay its employees on standard payroll system and pay quarterly payroll taxes to the IRS.
Most partnerships have a bookkeeper and a competent bookkeeper knows what the tax professional needs and will get it to him. Not all partnerships have a bookkeeper, and Torchlight Tax will do the bookkeeping needed to file the IRS Form 1065 for an additional fee. Some partners work out the profit and loss on their own. This fine if they keep good records and maintain a separate partnership bank account. A word of warning. If you are not good at records and bookkeeping, and especially if you are key to the sales and delivery of your partnership, hire a bookkeeper. Our bookkeeper at Torchlight Tax would be glad to handle your bookkeeping. Bookkeepers are usually less expensive than high producing partners, and they usually do a better job on the books.
To file your tax return, we will need a copy of your prior years partnership tax return 1065, any prior state partnership return, a profit and loss statement, a list of partners and their percentage of ownership. We will allocate the profit to the partners and send them a K-1 they need to file their personal 1040 tax return. In most cases, we will do individual 1040 tax return for the major partners at the same time, using the k-1 data from the partnership return. We do not have to do the individual major partners’ 1040 tax returns, but usually they like us to. This is done after the completion of the partnership 1040 return.
According to the IRS:
- Partnerships file Form 1065, U.S. Return of Partnership Income, to report income and expenses
- A partnership does not pay tax on its income but “passes through” any profits or losses to its partners. Generally, the partnership is required to prepare and give partners a Schedule K-1 (Form 1065), Partner’s Share of Income, Deductions, Credits, etc.
- The partners report the information from the K-1 on their own returns and pay any taxes due, including estimated taxes
How to Pay Estimated Tax
Because partners are not employees of the partnership, no withholding is taken out of their distributions to pay the income and self-employment taxes on their Forms 1040. The partners may need to pay estimated tax payments using Form 1040-ES.
There are five ways to pay estimated tax:
- Credit an overpayment on your 2012 return to your 2013 estimated tax
- Send in your payment (check or money order) with a payment voucher from Form 1040-ES
- Pay electronically using the Electronic Federal Tax Payment System (EFTPS)
- Pay by electronic funds withdrawal (EFW) if you are filing Form 1040 electronically
- Pay by credit or debit card using a pay-by-phone system or the Internet
Our expertise with the taxation of U.S residents working abroad and foreign citizens working in the U.S. allows us to competently handle the needed tax returns and minimize the tax liability and maximize any possible refund.
This area requires much trust between a client and his tax preparer. Being worthy of this trust is the priority with the Torchlight Tax team.
If you are considering using Torchlight for your international taxes, contact us for a free consultation. This can be done in person, on the phone, or even a video chat.
S-Corp = March 15
C-Corp = April 15