In fact, the biggest difference question I get is, “I didn’t make any income through my Corporation/Partnership this year. Do I still need to file taxes for it?”

However, the last thing we want to do is think of Corporations and Partnerships as the same thing come tax time, as there are some critical differences when it comes to IRS requirements.

The most prominent different is that with Corporations, you have to file taxes whether or not you earned income with it that year.

But with Partnerships, you do not need to file taxes if you didn’t earn income through it for that calendar year.

Likewise, you do not have to file a tax return for that Partnership if there are no credits or deductions to take.

The IRS further clarifies:

Domestic partnerships must file an information return except if it doesn’t collect gross income or registers any deductions or credits used for federal tax purposes. (Please note that the rules for foreign partnerships are a little different.)

For more information about filing requirements and exceptions for Partnerships, go to: Instructions for Form 1065, U.S. Return of Partnership Income

Corporations (including S-Corps), however, need to file their income tax return whether it has taxable income or didn’t make a dime. But that does not apply to corporations that are exempt from filing under IRS section 501 (for non-profits).

Again, there are slightly different rules and requirements for foreign Corporations.

For more information about filing requirements and exceptions for Corporations, go to Instructions for Form 1120-F, U.S. Income Tax Return of a Foreign Corporation

To find out more about IRS filing requirements for Partnerships or Corporations, click here.

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And to make sure we file taxes correctly for your Partnership or Corporation, make an appointment with my office at the link below.

Schedule my appointment now.