A) Partnerships are not subject to federal income tax at the entity level; instead, each partner reports their share of the partnership’s income, gains, losses, deductions, and credits on their individual tax return. However, if the partnership has income that is subject to tax, such as income from interest, dividends, or capital gains, then the partnership may need to make estimated tax payments.
To make estimated tax payments, partnerships must use Form 1065-W, which is the same form used to calculate the partnership’s quarterly estimated tax payments. The partnership must estimate its total taxable income for the year, as well as any other relevant information, such as deductions and credits, to determine its estimated tax liability.
The partnership must then divide the estimated tax liability by four and make equal payments throughout the year. The due dates for quarterly estimated tax payments are generally April 15, June 15, September 15, and January 15 of the following year. However, if any due date falls on a weekend or holiday, the due date is moved to the next business day.
Partnerships can make estimated tax payments electronically using the IRS’s Electronic Federal Tax Payment System (EFTPS), or by mailing a check with Form 1065-W to the appropriate IRS address. It’s important to note that partnerships must also file an annual partnership tax return, Form 1065, by March 15th (or the 15th day of the third month following the end of the partnership’s tax year) and provide each partner with a Schedule K-1, which reports their share of the partnership’s income, gains, losses, deductions, and credits.