Income Tax Q & A: IRS Form 1065 for Partnerships

What is Form 1065?

The IRS name for this form is “U.S. Return of Partnership Income.” This is an information return for partnerships to report the income, gains, losses, deductions, credits, etc. of the business.

The partnership itself does not pay tax on its income. Instead, the profits or losses are “passed through” to the partners, who pay tax on it through their individual income tax returns. Each partner must include Form 1065 when they file their income tax return.

Who must file Form 1065?

• All domestic partnerships, except for the cases listed below.
• Foreign partnerships that have gross income effectively connected with the conduct of a trade or business within the United States
• LLCs that are classified for income tax purposes as a partnership.
• Religious or apostolic organizations exempt from income tax under section 501(d) must report their taxable income, which must be allocated to their members as a dividend, whether distributed or not.

Who doesn’t have to file Form 1065?

• Spouses who materially participate as the only members of a jointly owned and operated business may elect to be treated as a “Qualified Joint Venture”. Instead of a 1065, they report income and deductions directly on their Form 1040 joint return. (Doing this won’t reduce taxes, but it will give each spouse credit for social security earnings.)
• Foreign partnerships with U.S. partners that had no effectively connected income and $20,000 or less of U.S. source income during their tax year.
• Foreign partnerships with no U.S. partners that had no effectively connected income and no U.S. partners during their tax year.
• Qualifying syndicates, pools, joint ventures or similar organizations may elect under section 761(a) not to be treated as a partnership for federal income tax purposes.
• Real estate mortgage investment conduits (REMICs). Instead, they must file Form 1066.
• Certain publicly traded partnerships treated as corporations under section 7704. Instead, they must file Form 1120.

When must Form 1065 be filed?

For calendar year domestic partnerships, the due date is March 15, 2019.

If you use a different tax year, the deadline is the 15th day of the 3rd month following the date your tax year ended. If that day happens to be a Saturday, Sunday or legal holiday, file by the next regular business day.

Can I get an extension?

Yes. Use IRS Form 7004 to request an extension of the filing deadline. It can be submitted electronically.

Where can I get a Form 1065?

Your tax preparer can take care of all that for you.

Or you can download Form 1065 and the other forms and publications you may need at irs.gov/forms-instructions. Order paper forms to be mailed to you at irs.gov/forms-pubs/order-products.

Who signs Form 1065?

It can be signed by any partner or LLC member.

If the return is prepared by a receiver, trustee, or assignee, the fiduciary must sign the return. In this case, Form 1065 must be accompanied by a copy of the order or instructions of the court authorizing the signing of the return or form.

How do I file Form 1065?

Postal mail: Send it to the IRS address listed in the Form 1065 instructions. The address varies according to the state your business is located in and the amount of its total assets.

Electronic filing:

• Most partnerships may choose to do so. See www.irs.gov/ pub/irs-irbs/irb12-10.pdf for how to submit a substitute Schedule K-1 in electronic format.
• Certain partnerships with more than 100 partners are required to file electronically.
• Certain types of returns may NOT be filed electronically, including bankruptcy returns and returns with pre-computed penalty and interest.

Private delivery service: The ITS authorizes the use of certain services, including DHL, FedEx, and UPS, to meet the “timely mailing as timely filing/paying” rule for tax returns. Go to IRS.gov/PDS for the current list of designated services. You must use an IRS mailing address, as listed in IRS.gov/PDSStreetAddresses, not a P.O. Box address. Be sure to get written proof of the mail date from your delivery service.

This brief overview does not cover all the complexities of filing Form 1065. For expert advice, please consult your xendoo tax expert.