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How are partnerships taxed?

Even though partnerships must file information annually which includes its profits, deductions, losses, gains, etc., a partnership does not pay income tax. Partners are required to include their shares in their respective individual tax returns. 

A partnership is, however, required to file Form 1065, US Return of Partnership of Income, in addition to employment or excise tax returns if they apply. In addition, each partner should have a copy of Schedule K-1 (Form 1065) to show the division of shares in income, gain, loss, deductions, and credits for the tax year. 

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