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racheldanielle0
New Member

Should I claim total gross income for a small general partnership with 5 owners or are we supposed to divide by 5 and only claim that portion?

for example: say we made 10,000 in the year, would we each report the 10,000 or would we each only report 2,000 on our own taxes?
1 Best answer

Accepted Solutions
Rick19744
Level 11

Should I claim total gross income for a small general partnership with 5 owners or are we supposed to divide by 5 and only claim that portion?

If you are asking this question, I strongly suggest that you meet with a tax professional for some guidance in this initial year.

This question should have been addressed in the partnership agreement that should have been drafted before the partnership even began operations.  This is not only important for tax allocation purposes, but it is VERY important in the event there are disagreements amongst partners or a partner wants to leave, etc.  If you do not have a partnership agreement I strongly suggest you ask for a recommendation from a tax professional (assuming this individual is not an attorney).

Partnership tax is not for the feint of heart and can get complicated very quickly regardless of size; depending on what transactions occur.

Penalties for failure to file (or late) a partnership return can get expensive very quickly.

 

*A reminder that posts in a forum such as this do not constitute tax advice.*

View solution in original post

4 Replies
DavidS127
Expert Alumni

Should I claim total gross income for a small general partnership with 5 owners or are we supposed to divide by 5 and only claim that portion?

A partnership is required to file a Form 1065 Partnership return, which can be done with TurboTax Business.  That tax return will generate a Schedule K-1 for each partner.  Each partner will then enter their Schedule K-1 when they prepare their individual (Form 1040) tax return.

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Rick19744
Level 11

Should I claim total gross income for a small general partnership with 5 owners or are we supposed to divide by 5 and only claim that portion?

If you are asking this question, I strongly suggest that you meet with a tax professional for some guidance in this initial year.

This question should have been addressed in the partnership agreement that should have been drafted before the partnership even began operations.  This is not only important for tax allocation purposes, but it is VERY important in the event there are disagreements amongst partners or a partner wants to leave, etc.  If you do not have a partnership agreement I strongly suggest you ask for a recommendation from a tax professional (assuming this individual is not an attorney).

Partnership tax is not for the feint of heart and can get complicated very quickly regardless of size; depending on what transactions occur.

Penalties for failure to file (or late) a partnership return can get expensive very quickly.

 

*A reminder that posts in a forum such as this do not constitute tax advice.*

View solution in original post

VolvoGirl
Level 15

Should I claim total gross income for a small general partnership with 5 owners or are we supposed to divide by 5 and only claim that portion?

You should not be doing this yourself, at least not the 1st year or 2.  Go to a CPA or Accountant and get it set up right.  A partnership is not self employment income.

 

Then if you want to do it yourself,  You need Turbo Tax Business.  The small business program (TT Business) is for 1120 Corporation, 1120S Corp, 1065 Partnership or 1041 Estate/Trust returns and will not do your personal 1040 return.   It  is a separate program from the Desktop Home & Business program or the Online Self Employed version.

 

Turbo Tax Business  is not available to do online or on a Mac.  You can buy the Window's version here.  And you can have both TT Business and TT Home & Business (or any personal version) installed on  your computer at the same time.

https://turbotax.intuit.com/small-business-taxes

Rick19744
Level 11

Should I claim total gross income for a small general partnership with 5 owners or are we supposed to divide by 5 and only claim that portion?

@VolvoGirl a partnership or an LLC taxed as a partnership can most definitely have self-employment income.  

*A reminder that posts in a forum such as this do not constitute tax advice.*
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