What Is Form 1041 Schedule K 1 2022-2023

Hi there this is aardvark tax TV I'm Sean kenefick an enrolled agent and customer service representative here at aardvark tax today we're going to talk about flow through entities and the schedule k-1 this video is part of a complete continuing education course available at our website w wrff etags comm in most cases when a single person or married couple owned a business they use the Schedule C to report their income but when a taxpayer partners to do business with someone else or many other someone else's or requires liability protection there's no longer an easy way to report the income that new entity generates to facilitate tax computation for these multi taxpayer conglomerates the IRS recognizes several different kinds of entities for tax purposes these entities include things like partnerships corporations and trusts a partnership is an arrangement where two or more taxpayers do business together and split the proceeds each person contributes money property labor or skill and expects to share in the profit and losses of the business some states require entity registration for partnerships which allows for limits of liability but the IRS does not require these kinds of things for partnerships the IRS does require however that partnerships fill out a separate 1165 tax return in addition to the 1040 tax returns that the partners individually provide partners in a partnership are not employees and should not receive w-2s or be on payroll instead all income that is generated to the partner through the partnerships flow to the individuals tax return through a storm call to schedule k-1 we'll talk more about k ones in a moment if your partner in a partnership you're going to have to pay self-employment tax like you would with a Schedule C a corporation is a...