Introduction: How to File Taxes for LLC Partnership
If your business is a multi-member LLC, the IRS treats it as a partnership by default. That means tax filing is different from a single-member LLC or corporation. In this guide, we’ll explain exactly how to file taxes for LLC partnership, including what forms you need, how income is reported, and key deadlines.
Step 1: Understand LLC Partnership Tax Basics
A multi-member LLC doesn’t pay taxes at the business level. Instead, it operates as a pass-through entity. The business itself files an informational return, and profits or losses are passed on to the individual members to report on their personal tax returns.
Step 2: File IRS Form 1065
The partnership must file Form 1065: U.S. Return of Partnership Income with the IRS.
- Purpose: Reports the business’s income, deductions, and other tax-related information.
- Due Date: March 15 (or the 15th day of the 3rd month after the end of the tax year).
Failure to file on time may result in penalties.
Step 3: Issue Schedule K-1 to Each Member
Along with Form 1065, the LLC must provide each member with a Schedule K-1 (Form 1065).
- Shows each partner’s share of profits, losses, credits, and distributions.
- Members use this form to report income on their individual tax returns.
Step 4: Report K-1 Income on Personal Taxes
Each member must include their K-1 income on Form 1040, typically using Schedule E.
- Even if profits weren’t distributed, taxes are owed on the reported share.
- Self-employment tax may also apply if members are actively involved in the business.
Step 5: Consider State Filing Requirements
Many states require LLCs to file separate returns or pay state-level taxes and fees.
- Some states also require additional forms like state K-1s.
- Check your local tax agency or consult a tax professional.
Optional: Elect Corporate Taxation
If your LLC prefers to be taxed like an S-Corporation or C-Corporation, you can file:
- Form 8832 for C-Corp taxation
- Form 2553 for S-Corp taxation
This changes how the LLC is taxed but not its legal structure.
Final Thoughts: Filing Taxes for an LLC Partnership
Knowing how to file taxes for LLC partnership is key to staying compliant and avoiding penalties. Here’s a quick recap:
| Task | IRS Form | Due Date |
|---|---|---|
| Business Tax Filing | Form 1065 | March 15 |
| Member Income Reporting | Schedule K-1 | Provided by LLC |
| Individual Tax Filing | Form 1040 + Sch E | April 15 |
