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The Internal Revenue Service requires businesses to calculate and report each of its partner’s shares of profits, losses, and capital. This process is often time consuming and complicated. Partners can take classes or buy tax preparation software to help, but in the end, nothing beats the guidance and advice of a real person trained to handle partnership tax returns. These experts know exactly what is required with your partnership tax preparation and will guide you through the entire process to help you avoid penalties.
Business Partnerships must file what is commonly referred to as the Internal Revenue Service Form 1065 annually to report their revenues and expenses. Ideally, the form must be filed by the 15th day of every fourth month or at the end of the partnership’s calendar year. Failure to submit your partnership tax preparation form on that particular day will require you to file Form 7004 in which the IRS may grant an automatic 5 month extension. At no point will the partnership be required to pay federal income tax.
On the other hand, like all tax return forms, the Schedule K is a living document that changes to reflect today’s laws. If you’ve filed a Schedule K in the past, it’s likely that something has changed since then. Although partnerships usually don’t pay taxes to the IRS, accuracy is still important.
Quick Facts on Partnership Tax Returns and Audits
Before partnership tax preparation, here are a few things that you need to understand about partnership tax returns and audits:
- Accuracy is the best defense against an IRS audit.
- You are more likely to be audited if a partner undergoes an audit.
- Some audits are random and unavoidable.
- Partnership income over $1 million significantly increases your odds of being audited.
Preparing your own partnership tax is possible as mentioned above; however, the process itself is cumbersome and time consuming. Filing and preparing this yourself will be prone to errors or discrepancies that will make you incur additional charges accounted to you by the IRS. The experts at Class Advisors can offer you a way out of this predicament.
To minimize mistakes and reduce the odds of delaying your filing process, contact Class Advisors. At Class Advisors, it is our job to adapt to new federal laws on tax preparation, allowing business owners to concentrate on running their businesses. We can help you do it right the first time, so you have nothing to fear should an audit occur. Our experts are always up to date with all the developments in federal tax law. Hence, rest assured that the process will be carried out in accordance the latest regulations.
Give us the opportunity to solve all of your partnership tax preparation problems and we can guarantee that you won’t regret it!