When two or more individuals work together on a business, they form a partnership and each contributes their time, talents, resources, and/or money. They thus receive a cut of the company’s gains and losses. Due to the fact that they do not pay income tax, partnerships must file information returns. Profits and losses are instead distributed to the partners, who then submit their own tax returns.

A Partnership firm may require the following forms:

  1. The annual return of income:
    1. Form 1065, U.S. Return of Partnership Income
  2. Employment taxes:
    1. Form 941, Employer’s Quarterly Federal Tax Return
    2. Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees
    3. Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return

The individual Partners may require the following forms:

  1. Income tax:
    1. Form 1040, U.S. Individual Income Tax Return
    2. Schedule E, Form 1040, Supplemental Income and Loss
  2. Self-employment tax:
    1. Form 1040, U.S. Individual Income Tax Return
    2. Schedule SE, Form 1040, Self-Employment Tax
  3. Estimated tax:
    1. Form 1040-ES, Estimated Tax for Individuals

Source: Internal Revenue Service

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