Generally, a partnership does not pay income tax on its income, but “passes through”
any profits or losses to its partners. Each partner is liable for tax on his or her
distributive share of the partnership income.
Every partnership is required to (1) file an Internal Revenue Service (IRS) Form 1065 U.S. Return of Partnership Income to report the income, gains, losses, deductions, credits, etc., from the operation
of the partnership; and (2) give each partner a Schedule K-1 showing their net earnings or loss from the partnership’s income or loss. For more
information on partnership’s income or loss, see IRS Form 1065 - Partner's Instructions for Schedule K-1.
Each partner files an IRS form 1040 Schedule SE Self-Employment Tax to report his or her self-employment income (SEI).