IRS Tax Interactive - Real Planet

Ricky and the Squig Man must file an annual return of income for their partnership, Blast Interactive. They use this partnership return to report their business income, deductions, each partner's share of the taxable income, and other information about their business.

Forms to Use - Form 1065
References - Form 1065 Instructions and Publication 541

As partners, Ricky and the Squig Man each file an annual income tax return for their share of the taxable business income. Income tax is a pay-as-you-go tax. Ricky and the Squig Man are required to pay the tax as they earn and receive income during the year.

Forms to Use - Form 1040 and 1040 (Schedule E)
References - Form 1040 (Schedule E) Instructions and Publication 535

Ricky and the Squig Man are each required to pay self-employment tax. Partners pay this tax instead of social security and Medicare tax.

Forms to Use - Form 1040 and 1040 (Schedule SE)
References - 1040 (Schedule SE) Instructions and Publication 334

Ricky and the Squig Man each pay their taxes on income by making regular payments of estimated tax during the year. Ricky and the Squig Man each pay estimated tax because they expect their individual income and self-employment tax to be more than $1,000.00 when they file their individual returns at the end of the year.

Forms to Use - Form 1040-ES
Publication to Reference - Publication 505

If Ricky and Squig Man hire employees, they are required to withhold and pay employment taxes. As an employer, Ricky and Squig Man are responsible for withholding income taxes, withholding and paying Social Security and Medicare taxes, and paying unemployment taxes on wages paid to an employee.

In addition, Ricky and Squig Man are responsible for reporting certain types of payments made during the year on information returns. Form W-2, Wage and Tax Statement, and 1099-MISC, Miscellaneous Income, are examples of information returns. See Publication 15, Employer's Tax Guide, for additional information.

Ricky and Squig Man are required to withhold income tax from each employee's wages. They are also required to withhold part of Social Security and Medicare taxes from their employee's wages and pay a matching amount themselves.

Forms to use: Form 941, Employer's Federal Tax Return
References: Form 941 Instructions; Publication 15, Employer's Tax Guide and, Publication 15A, Employer's Supplemental Tax Guide

Ricky and Squig Man are required to pay FUTA tax from their own funds. Rick and Squig Man's employees do not pay this tax or have it withheld from their pay.

Forms to use: Form 940 or Form 940EZ, Employer's Annual Federal Unemployment (FUTA) Tax Return
References: Form 940 Instructions; Publication 15, Employer's Tax Guide and, Publication 15A, Employer's Supplemental Tax Guide

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