Form 1065: the partnership return

Who files Form 1065?

Every domestic partnership files Form 1065, and so does every LLC with two or more members that has not elected to be taxed as a corporation. Filing is required even if the business had no income, made a loss, or did very little during the year. See how LLCs are taxed.

LLCs owned by married couples have special options. See husband and wife LLC.

When is it due?

By the 15th day of the 3rd month after the tax year ends. For calendar-year partnerships, the 2026 return is due March 15, 2027, and partners must receive their Schedules K-1 by the same date. Form 7004, filed by the due date, extends the return by six months, to September 15, 2027. See Form 7004.

How is the form organized?

Small partnerships can skip Schedules L, M-1 and M-2 if they answer yes to the Schedule B question that tests total receipts, total assets and timely K-1 delivery. Schedules K-2 and K-3 report items of international tax relevance, and many purely domestic partnerships are excepted from them if they meet the conditions in the instructions.

Why are some items passed through separately?

Items that can be taxed differently in partners' hands, such as capital gains, charitable contributions, Section 179 deductions and interest income, are kept out of ordinary business income and reported separately on Schedule K and K-1. Each partner then applies their own limits and rates to them.

How are payments to partners reported?

Partners are not employees of the partnership. Fixed payments to a partner for services or for the use of capital are guaranteed payments: deductible on page 1, and reported to the partner on their K-1. Other money taken out is a distribution, which does not reduce partnership income. See how to pay yourself from an LLC.

See guaranteed payments explained.

What if a partner is foreign?

A partnership with income effectively connected with a US trade or business must generally withhold tax on the share allocable to foreign partners, and report it on Forms 8804 and 8805. Foreign partners then file Form 1040-NR and claim credit for the withholding. See Form 1040-NR.

The full picture for LLCs with foreign members, including section 1446 withholding, is in foreign-owned multi-member LLC taxes.

What does filing late cost?

A flat penalty for each person who was a partner at any time in the year, for each month or part of a month the return is late, for up to 12 months. For returns due in 2026 it is $255 per partner per month, rising to $260 for returns due in 2027. It applies even when no tax is owed. Partnerships with 10 or fewer partners may qualify for relief if every partner reported their share on a timely return. Worked examples and relief routes are in late partnership and S corp returns. See late filing and late payment penalties.

Who deals with the IRS for the partnership?

Under the centralized partnership audit regime, each partnership designates a partnership representative on its return, who has sole authority to act for it in an IRS examination. Eligible partnerships with 100 or fewer qualifying partners can elect out of the regime each year on the return.

Corrections after filing follow special rules. See how to amend a business tax return.

This guide is general information. It is not tax or legal advice for your situation.