Form 1065
Definition
The US return of partnership income, filed by partnerships and most multi-member LLCs. The partnership reports results but does not pay the tax; each partner receives a Schedule K-1 and reports their share on their own return.
Related Terms in US Tax
Schedule K-1
The statement issued by a partnership, S corporation or trust telling each partner, shareholder or beneficiary their share of income, deductions and credits. Recipients need it to complete their personal returns, so late K-1s commonly force extensions.
Estimated Tax
Periodic prepayments of US federal and state income tax made by those whose income is not subject to sufficient withholding, including the self-employed and many business owners. Paid on a quarterly schedule set by the IRS, with underpayment penalties for falling short.
Safe Harbor (Estimated Tax)
A rule that protects a taxpayer from underpayment penalties if their prepayments meet a defined minimum, generally measured against either the current years liability or the prior years tax, with a higher prior-year test for higher earners. The precise percentages are set by the IRS and should be checked for the year concerned.
Nexus
The connection between a business and a US state sufficient to create a tax obligation there. Physical nexus arises from premises, staff or inventory; economic nexus arises from exceeding a states sales or transaction thresholds, which differ by state and are published by each revenue department.
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