Schedule SE to report net self-employment income for purposes of computing Social Security, Medicare and self-employment tax. Minnesota: There is no separate form for reporting sole proprietorship income. To compute Minnesota income tax, the proprietor uses Form M1 - Individual Income Tax Form. A copy of the federal Form 1040, including a copy of Schedule C, plus Schedule SE, if appropriate, must be attached to Minnesota Form M1. Minnesota does not impose a self-employment tax. Partnership. Federal: The partnership files Form 1065, U.S. Return of Partnership Income, which is an information return. No tax is paid by the partnership with this return. Other forms and schedules may be required, including Schedules K (Form 990) and K-1 (Form 1041). Individual partners use Schedule E (Form 1040), Supplemental Income and Loss which is prepared with information from their Schedule K-1 of Form 1065, to report their distributive share of partnership income, deductions, credits and losses on their individual Form 1040. Schedule SE (Form 1040) is used to compute Social Security and Medicare self-employment tax. Minnesota: For Minnesota income tax purposes, the partnership files Form M3. Taxes paid by the partnership include: Minnesota Minimum Fee, Minnesota Composite Tax, and Withholding for Non-Resident Partners (described in the Tax Rates section of this Guide). Partnerships may also elect to pay Pass-Through Entity (PTE) Tax. Schedules KPI and KPC are supplemental K-1 schedules used for reporting modifications to federal income tax computations of partnership income and the other information partners need to complete their return C Corporation. Federal: The C corporation reports its income, deductions and credits, and computes its tax, on Form 1120 or Form 1120-A. Supporting forms and schedules may be required. If the corporation issues dividends, it must annually send its shareholders Form 1099-DIV, Dividends and Distributions, stating the amount of dividends paid. A copy also is filed with the Internal Revenue Service and the Minnesota Department of Revenue. The shareholder reports dividends received from the corporation on his or her individual Form 1040. Minnesota: The corporation files Minnesota Form M4. Dividends paid to shareholders are included in the shareholders federal taxable income reported to the Department of Revenue, Form M1. S Corporation. Federal: The S corporation files Form 1120-S and supporting forms and schedules, including Schedules K and K-1 (Form 1120-S). The S corporation generally is not separately taxed. Individual shareholders report their share of the S corporation’s income, deductions and credits on their individual Form 1040, using information contained on the Schedule K-1. Minnesota: For Minnesota income tax purposes, the S corporation files Form M8. Taxes paid by the S corporation include: Minnesota S Corporation Taxes, (which apply only if the S corporation is paying federal income tax), Minnesota Minimum Fee; Minnesota Composite Income Tax; and Withholding for Nonresident Shareholders (see discussion in the Tax Rates section of this Guide). S corporations may also elect to pay Pass-Through Entity (PTE) Tax. Schedule KS is a supplemental K-1 type schedule used for reporting modifications to federal income tax computations of S corporation income and the other information a shareholder needs to complete their return. Limited Liability Companies. A multi-member Limited Liability Company electing to be taxed as a partnership reports its income on IRS Form 1065, U.S. Partnership Return of Income. Each owner shows their share of partnership income, credits, and deductions on Schedule K-1 (1065). A multi- member Limited Liability Company electing to be taxed as a C corporation reports its income on Form 1120, U.S. Corporation Income Tax Return. A multi-member Limited Liability Company
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