As a FLP, basically you are working as an independent contractor
or self employed person. This means you will be responsible for paying your own federal and state income taxes, as well as SS and Medicare taxes
At the end of the year you will report all of your income
and your related expenses on Schedule C
of your personal tax return
. Tax is then due on your net earnings after deducting expenses.
Since taxes are not withheld from your checks as is the case with a regular employee job, you should try to estimate what your total tax liability
might be at the end of the year, and then make quarterly estimated tax payments
to both the IRS
and the state of NM. Otherwise, at the end of the year if you owe too much tax then you would also have some penalties and interest
to pay for the underpayment of tax during the year.
Estimated tax payments are made to the IRS on Form 1040-ES
and to the state of NM on Form
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