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How Do I Include My Business Tax Information in My Personal Tax Return?

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Question: How Do I Include My Business Tax Information in My Personal Tax Return?
Businesses which are not corporations include business taxes in the personal tax returns of the owner or owners. This discussion applies to Schedule C for a sole proprietorship or single-member LLC and Schedule K-1 for a partnership or multiple-member LLC. Here is how you include this business tax information in your personal tax return.
Answer:

Sole Proprietorship or Single-Member LLC
If you are filing business taxes as a sole proprietor or single-member LLC (which is taxed as a sole proprietorship), you will use Schedule C to determine the net income of your business. Enter the information on Net Profit (Loss) on Line 31 of your Schedule C on Line 12 (Business Income or Loss) of your personal Form 1040. The net profit or loss of your business is used to determine your adjusted gross income and your personal taxes.

More information on Schedule C, including instructions on how to prepare, when you can use Schedule C-EZ, and more.

Partnership or Multiple-Member LLC
If you are filing business taxes as a partner in a partnership or member of a multiple-member LLC (which is taxed as a partnership), you will use Form K-1 to determine the net income of your business. Form K-1 information is obtained from the partnership tax return (Form 1065) which was previously completed and filed separately with the IRS. No taxes are paid on Form 1065; it is only an information return.

Schedule K-1 includes several pieces of information which must be included in the correct place on Schedule E - Supplemental Income and Loss. Then the total Schedule E information is entered onto your personal Form 1040 on Line 17. It's best to have a tax preparer help you with this work, or to use a tax software program that will allow you to enter the information on a blank K-1 and have the information automatically placed in the correct section of your 1040.

Including Business Income in Schedule SE
Your business income is used to determine your self-employment taxes (Social Security/Medicare for self-employed). You must insert the information on your net income from Schedule C and your share of partnership income from Schedule K-1 on Schedule SE, to calculate your self-employment tax liability.

Mail Your Tax Return on Time
Make sure you file your tax return so it is received by the IRS no later than the due date. This article on How to File Your Business Tax Return will give you the information you need.

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