Limited Liability Companies (LLCs) Multi-Member LLC Taxed as Partnership • Federal: Form 1065, U.S. Return of Partnership Income
• Federal: K-1 (Form 1065) : for each owner • Minnesota: Form M3, Partnership Return Multi-Member LLC Taxed as C Corporation • Federal: Form 1120-S , U.S. Income Tax Return for an S Corporation • Minnesota: Form M4, Corporation Franchise Tax Return Multi-Member LLC Taxed as S Corporation • Federal: Form 1120-S, U.S. Income Tax Return for an S Corporation • Federal: Schedule K-1 (Form 1120-S) for each owner
• Minnesota: Form M8, S Corporation Return Single-Member LLC Taxed as Disregarded Entity • No separate federal return required • Owner reports all income: On Form 1040 and appropriate schedules (typically Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship) ) • Minnesota: Income reported on owner's Form M1, Individual Income Tax Making Your Tax Election • Multi-member LLC : File IRS Form 8832, Entity Classification Election to elect corporate taxation • Single-member LLC : o No filing needed for disregarded entity (default) o File Form 8832, Entity Classification Election to elect corporate taxation Important Tax Considerations Minnesota Pass-Through Entity (PTE) Tax What it is: A state-level "workaround" to the $10,000 federal limit on state and local tax deductions. How it works: • Partnership or S corporation pays tax on behalf of partners/shareholders • Tax calculated at the highest Minnesota individual income tax rate • Partners/shareholders claim refundable credit on their Minnesota return (Schedule M1REF, Refundable Credits )
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