Do I have to pay tax on my partnership income?

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 Partnership income that is not withdrawn increases the value of your capital account.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.

Related tax information about partnership income
Tax Directory Topics:
Self Employment Tax
Income Related Questions and Answers
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. Please read this IMPORTANT Editor's Note regarding navigating IRS publications with Adobe Acrobat Reader.
IRS publications can also be ordered by calling 1-800-829-3676.
Customer Support
Still have IRS or tax questions?
To view the alphabetical Master Index of all tax and IRS topics
click here.

Ask Julian Block your IRS and tax questions!
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

Prepare your IRS tax return and State tax return online - If you'd like to e-file and/or print your IRS tax return or State tax return online click here.

Web Site Statistics:
Last Updated:
No. of Pages:

1,321

No. of Topics:

931

  Home
  What's the Tax Directory?
  How to use this Tax Directory?
  Prepare your tax return
  Our Awards and Testimonials
  Professional Tax Software
  What's New for 2007?
  Master Index of Tax Topics
  General Tax Questions
  Questions about:
     Income
     Exemptions
     Adjustments
     Due Dates - Tax Calendar
     Tax Deductions
     Dependents
     Tax Credits
     Tax Payments
     Self Employment Tax
     Electronic Filing
     Tax Extensions
     Extension Forms
     Tax Audits and Collections
     Your chances of an IRS Audit
  Avoiding Common Errors
  Tax Tables pdf.gif (56 bytes)
  Tax Rate Schedules
  1040 Instructions pdf.gif (56 bytes)
  1040A Instructions pdf.gif (56 bytes)
  1040EZ Instructions pdf.gif (56 bytes)
  Publication 17 pdf.gif (56 bytes)
  Tax Forms and Publications
  IRS Tele Tax Topics
  IRS FaxBack Topics
  IRS Mailing Addresses
  Help from the IRS
  Checking Tax Refund Status
  Ask Julian Block
  IRS & Government Tax Links
  Tax Discussion Groups
  Testimonials
  The Top Ten most frequently asked questions.
  Glossary of Tax Terms
  Get Acrobat Reader 6.0

 

 
For further information regarding IRS rules and regulations and your particular tax or IRS situation you should consult with a Certified Public Accountant, Enrolled Agent, Attorney, or other tax advisor. Please review our Terms of Use.
Terms of Use

Privacy Policy

Have questions or comments about this web site? click here 
Copyright © 1995-2007. WorldWideWeb Tax™. All Rights Reserved.