In the US, partnerships don’t pay federal income taxes. Instead, any income, gains, losses, and deductions are passed through to partners, which is why partnerships are often called “pass-through entities.” In this way, partnerships and their partners are not subject to double taxation. Even so, partners still need to file a tax return with the IRS outlining their income and losses for the year. That’s where Form 1065 comes into play, because it is the primary tax return form filed by a partnership.
Below, we take a closer look at what Form 1065 is, what information it contains, and who needs to file it. We also explain Schedule K-1, a form that details each partner’s share of income, deductions, credits, and other relevant forms.
What is Form 1065?
Form 1065 is an IRS tax form that acts as a tax return for partnerships. As such, it details the partnership’s income and losses for the tax year.
Partnerships will then issue Schedule K-1 for all partners or owners with an interest in the partnership. These ancillary forms are sent to both the IRS and individual partners, who will use the information contained to file their individual tax returns.
What's on the 1065 tax form?
Form 1065 includes information about a partnership and its operations for the year, such as total income, deductions, gains, and losses. It’s split into five main sections:
Partnership Information
This section details basic information about the partnership, including its principal business activity, principal product or service, business code number, name, address, business start date, employer identification number (EIN), and total assets.
Partnership Income
Partnership income details how much income the partnership earned during the tax year, including:
- Gross receipts or sales
- Cost of goods sold (COGS)
- Ordinary income or loss from other partnerships, estates, and trusts
- Net gain or loss
- Total income or loss
Partnership Deductions
Additionally, Form 1065 details the partnership’s deductions for the year, including:
- Salaries and wages (to employees other than partners)
- Guaranteed payments to partners
- Repairs and maintenance
- Bad debt
- Rent
- Taxes and licenses
- Interest
- Depreciation
- Retirement plans
- Employee benefits
- Total deductions
Partnership income and deductions are used to calculate the partnership’s ordinary business income or loss.
Partnership Tax and Payment
After deductions, Form 1065 contains information about taxes and payments made or that could be owed by the partnership. Note: Partnerships will only have federal tax obligations in very select circumstances. Partners would generally be responsible for reporting and paying any potential tax due on their share of a partnership’s taxable items. These situations are uncommon and generally do not apply to Fidelity funds.
Attached Schedules
Additional forms (called schedules) may also need to be filed along with Form 1065. These commonly include:
- Schedule B, Other Information
- Schedule K-1, Partners’ Distributive Share Items
- Schedule K-2 and K-3, International Tax Relevance
- Schedule L, Balance Sheets per Books
- Schedule M-1, Reconciliation of Income (Loss) per Books With Analysis of Net Income (Loss) per Return
- Schedule M-2, Analysis of Partners’ Capital Accounts
What's the difference between Form 1065 vs. Schedule K-1?
Form 1065 details the partnership’s total income and losses for the year, whiles Schedule K-1 details what share of those profits and losses belongs to each of the partners—who are ultimately responsible for paying taxes on that income. Partnerships often prepare and issue a K-1 along with an extension for filing Form 1065, which may be filed 6 months later, giving partners access to their IRS information before it is formally submitted.
Who has to file IRS Form 1065?
All partnerships with income or losses originating in the US are required to file a Form 1065. This could include domestic partnerships, foreign partnerships, and limited liability companies (LLCs) electing to be partnerships.
Domestic partnerships
Any domestic partnership headquartered in the US with 2 or more members—including general partnerships and limited partnerships—is required to file Form 1065 each tax year. This is required of all domestic partnerships that have received income or incurred losses. If no income or expenditures treated as deductions or credits for federal income tax purposes are generated, then filing Form 1065 is not required.
The IRS also classifies syndicates, groups, pools, joint ventures, and other unincorporated organizations as partnerships.
Foreign partnerships
A foreign partnership that has generated gross income from a trade, business, or US sources is required to file Form 1065. This is true even if the members are foreign and the partnership is based outside the US.
Certain foreign partnerships may qualify for filing exceptions under detailed IRS rules when US income and US ownership are minimal. Taxpayers should consult the Form 1065 instructions or a tax professional to determine eligibility.
Limited liability companies (LLCs)
LLCs can be classified as either partnerships, corporations, or disregarded entities. When an LLC is classified as a partnership, it’s required to file Form 1065 per the rules outlined above for partnerships.
When do you have to file Form 1065?
Partnerships are required to file Form 1065 by the 15th day of the third month after its tax year has ended. So, for example, if the partnership follows the calendar year that ends on December 31, its Form 1065 would be due on March 15. If this due date falls on a weekend (Saturday or Sunday) or legal holiday, then the return is due on the next day that is not a weekend or holiday.
What are the penalties for filing Form 1065 late?
As of tax-year 2025, filing Form 1065 late will result in a penalty of $255 per partner per month (or part of a month) that the form is late, for a maximum of 12 months.
A 5-person partnership that files its Form 1065 three months late, for example, could owe penalties of $3,825.
How do you apply for an extension to file Form 1065?
If a partnership needs more time to prepare and file Form 1065, it can request an extension for 6 months by filing Form 7004 (Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns). Form 7004 must be filed by the partnership’s 1065 due date.
How to complete Form 1065
Any partnership required to file Form 1065 should follow the IRS instructions. Steps generally include:
1. Determine when you need to file
As noted above, your partnership’s Form 1065 will be due on the 15th day of the third month after its tax year has closed. If you follow the regular calendar year that ends December 31, that means it’s due by March 15 each year. If necessary, you can file Form 7004 for an extension.
2. Gather the relevant information
To complete Form 1065, you will need to have information about the partnership’s finances and operations during the year. This information includes:
- Profit and loss statement (P&L)
- Balance sheet
- Depreciation schedules
- Bookkeeping records (bank and credit card statements, general ledger, receipts, invoices, etc.)
- Partner information (name, address, tax ID numbers, ownership details)
3. Complete other necessary tax forms
Some of the information that you include in your Form 1065 will come from other tax forms, which you will either need to complete before (or while) completing the 1065. These include:
- Form 1099-MISC/NEC, detailing services and rent
- Form 1099-B, detailing broker transactions
- Form 1125-A, detailing COGS
- Form 4797, detailing sale of business property
- Form 4562, detailing depreciation and amortization
- Form 8918, the material advisor disclosure statement
- Form 8949, detailing sales of capital assets
- Form 114, detailing any foreign bank accounts or financial accounts
4. Complete Form 1065
Using the collected documents, statements, and tax forms, fill in Form 1065. A copy of the form can be downloaded from the IRS website. You can also use tax preparation software or hire a licensed tax preparer to complete the form.
5. Complete and attach any relevant schedules
As noted above, a variety of additional schedules are often required to be attached to your partnership 1065. At a minimum, this may include a Schedule K-1 for each partner. Other schedules, detailed above, may include Schedule K-2, Schedule K-3, Schedule L, Schedule M-1, and Schedule M-2.
6. File with the relevant IRS Center
Different IRS centers handle the tax returns for different partnerships. Where you are required to file your 1065 will depend on your state (or country) of residence and the income your partnership generated during the year. Note: the IRS has prepared a chart to help you determine where you are required to file.
Consider consulting a financial or tax professional to help with your tax filing needs.