Updated July 27, 2015
Tax Form 1065 K-1 Tax Preparation Chicago Illinois
Form 1065 is the Federal Partnership Return. Regular partnerships, along with Limited Liability Companies and Limited Liability Partnerships are reported on this return.
From a taxation standpoint, a partnership is nothing more than than two or more sole proprietorships put together. As such, the partnership return is nothing more than a conduit of taxable income or loss to your personal return via Schedule K-1.
The biggest problem generally caused by partnerships is the payroll taxes that they create. Social Security and Medicare taxes are currently 15.3% of a partner’s income. But here’s the problem. You will pay that 15.3% not only on the guaranteed payments coming out of the partnership, but also on your portion of the partnership profits, whether you have received the money, or not.
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Chris Amundson is the President of Accounting Solutions Ltd., a full service public accounting firm of Certified Public Accountants and Enrolled Agents handling the bookkeeping, accounting, tax preparation, and audit representation needs of Businesses, Estates, Trusts, and Upper Income Individuals.