How to File Taxes for a Partnership LLC? (2026 Guide)
When you form a multi-member LLC, the IRS will typically tax your business as a partnership — and that means three forms: Form 1065, Schedule K-1, and Form 1040.
Over 10 years of corporate law practice, I've helped more than 200 LLCs file their partnership taxes accurately and on time. Here's the exact process I walk every client through.
Quick Summary
- To file taxes as an LLC partnership, you need to accomplish and submit IRS Form 1065, Schedule K-1, and Form 1040.
- Form 1065 reports the finances of the business while Schedule K-1 reflects the income and losses of each partner and is filed on their respective individual income tax return, Form 1040.
- According to the IRS, in 2020, there were 4,280,690 million partnerships in the U.S., with limited partnerships making up 10.5% yet controlling 34.9% of partners and 28% of profits, highlighting the importance of tax compliance.
- When filing taxes for a business, I ensure that all information is complete and accurate to avoid complications that may lead to penalties.
Filing Taxes for a Partnership LLC
The numbers tell you how common this situation is. In 2020, the U.S. had 4,280,690 business partnerships — a 12% jump from the prior year. Limited partnerships made up just 10.5% of that total, but they pulled in 28% of all profits and held the largest share of partners at 34.9% [1].
The IRS also classifies most multi-member LLCs multi-member LLCs as partnerships for tax purposes, which means the same filing rules apply regardless of how your operating agreement is structured.
Here's what you'll need to file:
1. Form 1065: U.S. Return of Partnership Income
Form 1065 is the IRS document your LLC uses to report its profits, losses, deductions, and credits for the year [2]. Think of it as the partnership's financial report card — the LLC files one form, but the business itself doesn't pay income tax on it.
The deadline is March 15 each year. You can file through an online tax service or by mail, and the form is available directly on the IRS website.
You need to include the following information when completing Form 1065:
- Net income and revenues
- Deductible expenses
- Balance sheet
It must also include:
- EIN
- Number of partners
- Start or inception of the business
- Percentage ownership of each partner
2. Schedule K-1: Partner's Share of Income, Deductions, Credits
On top of Form 1065, every partner needs their own Schedule K-1 — this is where each person's share of the LLC's earnings, losses, deductions, and credits gets reported individually.
One thing I always flag for clients: the K-1 itself doesn't get attached to your personal tax return. You just pull the financial figures from it and transfer them over to Form 1040. That trips up a lot of first-time filers.
Also worth knowing — partners owe tax on their share of income whether or not any money was actually distributed to them.
"I like to pay taxes. With them, I buy civilization."
- Oliver Wendell Holmes Jr., Former Chief Justice of the Massachussetts Supreme Judicial Court
3. IRS Form 1040: U.S. Individual Income Tax Return
Form 1040 is the standard individual income tax return — every partner files one. It's available on the IRS website and the deadline is April 15 each year, whether you file electronically or by mail.
Form 1040 has to include the following information:
- Filing status
- Name Address
- SSN
- Number of dependents
The income section requires the following information:
- Wages
- Salary
- Capital gains
- Pensions
- Social security benefits
- Other types of income
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Distributive Share Taxes
If your multi-member LLC is taxed as a partnership, each member gets what's called a distributive share — their portion of the company's profits or losses, whether cash or property.
That share has to be reported on each member's personal tax return. The IRS wants to see it regardless of whether any money actually changed hands.
LLC Employee Taxes
Got employees? Then your multi-member LLC owes federal income taxes on the wages you pay them.
The rules here are no different from any other business structure — you'll need to withhold Social Security and Medicare taxes from your employees' paychecks, just like a corporation or sole proprietorship would.
FICA Taxes
Under the Federal Insurance Contributions Act (FICA), both employers and employees contribute equally to Social Security and Medicare taxes.
In 2023, each pays 6.2% for Social Security up to $160,200 of the employee's wages, and 1.45% for Medicare on all earnings, with no cap.
Additionally, employees earning over $200,000 are subject to an extra 0.9% Medicare tax on the excess.
Employers are responsible for withholding these taxes from employee wages.
FAQs
Why Would an LLC Elect to Be Taxed as a Partnership?
An LLC elects to be taxed as a partnership to avoid double taxation and maintain the company as a pass-through entity.
Can You Change a Partnership LLC to a Single-Member Limited Liability Company?
You can change a partnership LLC to a single-member limited liability company by filing IRS Form 8832 with the Internal Revenue Service. As with all legal filings, there will be an associated fee for this service.
References:
- https://www.irs.gov/pub/irs-soi/soi-a-copa-id2204.pdf
- https://www.irs.gov/businesses/small-businesses-self-employed/llc-filing-as-a-corporation-or-partnership
