What are the tax liabilities for a Partnership?

A partnership itself generally has no direct tax liability on income. Instead, the IRS treats partnerships as pass-through entities, meaning that income, deductions, credits, and other tax items pass through to the individual partners. The partnership files an informational return, but each partner is responsible for paying their share of taxes on their personal return.

Partnership Return Filing Requirements

Partnerships must file Form 1065, U.S. Return of Partnership Income. While Form 1065 does not calculate a tax liability for the partnership itself, it reports the partnership’s financial activity for the year.

Each partner then receives a Schedule K-1, which details their share of the partnership’s income, deductions, and credits. This information is included on the partner’s individual or business tax return, depending on the partner’s filing situation.

Who Pays the Taxes?

• Individual partners report partnership income on their  Schedule K-1  and pay taxes at their applicable rates.
• Partnerships themselves generally do not pay federal income tax directly.
• Some states may impose franchise taxes or fees on partnerships, depending on state rules.

It’s also important to note that partners may need to make quarterly estimated tax payments if they expect to owe $1,000 or more in federal tax from partnership income.

Additional Resources

- Learn more about IRS partnership tax rules.
- Review our support center for guidance on tax extensions and business filings.
- Explore tax articles for more on business entity filing deadlines and liabilities.