Do I have to pay tax on my partnership income?
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| A partnership itself generally does not pay income
tax to the IRS. A
partnership files an annual information tax return with the IRS, Form 1065, stating all items
of taxable income and tax deductions. Included is Schedule K-1 which details each partner's share of
taxable income and tax deductions. If you are a member of a partnership that carries on a trade or
business, your distributive share of partnership income or loss is taxable to
you on your tax return. It
makes no difference whether or not the partnership profits were distributed,
they are still taxable on your tax return.
Partnership income that is not
withdrawn increases the value of your capital account. Report the
partnership income on your Form
1040 as indicated on Schedule K-1 of Form 1065. Your net earnings from
self employment are
shown on Schedule K-1 of Form 1065. Figure your self employment tax on Form 1040, Schedule SE.
Do
not attach Form 1065 or it's Schedule K-1 to any personal tax return filed.
If you earn or receive
taxable income during the tax year that is not subject to tax withholding, or if
you do not have enough income tax withheld, you may have to pay estimated tax.
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Related tax
information about partnership income |
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Self Employment Tax
Income Related Questions and Answers |
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IRS publications about partnership income:
For more tax information about partnership income refer to
IRS Publication 541, Partnerships.
Also see
IRS Publication 17, Your
Federal Income Tax. |
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Ask Julian Block your IRS and tax questions! |
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If you can't find the answer to your IRS or tax question in our
web you can call former IRS Special Agent and one of the country's foremost tax attorneys, nationally syndicated columnist ("The Tax
Adviser") Julian Block. Julian is also the tax Editor of Mutual Funds Magazine, America's premier investment magazine. To
call Julian for a tax consultation click
here. |
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