Form 1065 is an IRS form that partnerships use to report their income. Partnerships do not pay income on gains or losses, but instead these are passed through the business to the partners.
Below you'll find Form 1065 instructions, as well as frequently asked questions.
How to Fill Out Form 1065:
1. Gather your financial data.
Before you start filling out Form 1065, make sure that you have all of your financial statements in front of you. The form requires a detailed financial picture of your partnership, so you will need to refer to these numbers as you work through it. If your accountant is filling out the form on your behalf, make sure that he or she has all of the necessary information.
2. Identify your partnership.
The top of the form asks for the name of your partnership, the registered address, your employer identification number, and several other identifying pieces of information. Be sure to fill this portion out accurately so that the IRS can correctly identify your business.
3. Record income and deductions.
The first page of the form asks you to list the specifics of your income and deductions in the applicable fields. This includes your gross profit, net profit, cost of goods sold, rent payments, etc. The bottom of this page must be signed and dated by a partner or LLC member.
4. Work through schedules B, K, L and M.
The remaining sections of the form ask for more information about the structure of your business and your financial status. You will be asked to include numbers from your balance sheets for the beginning and end of the year in question, and in Schedule K you will be asked to disclose more information about your income, deductions, and any foreign transactions.
5. Review and make sure the form is signed.
As mentioned above, the first part of the form must be signed by a partner or LLC member. In addition, page 3 must include the contact information for the designated Tax Matters Partner (TMP). The TMP is a partner in the business who has been designated to handle the tax proceedings, should the need for either an audit or further clarifying information arise.
6. Submit the form with your taxes.
Form 1065 should be submitted with your other tax information when you file your business tax return. You can locate the address that corresponds to your business location by going to irs.gov/filing/where-to-file-your-taxes-for-form-1065.
How do I file a 1065 tax form?
Can I file Form 1065 electronically?
Large partnerships with over 100 partners are required to file electronically. All other partnerships may choose to voluntarily file their Form 1065 electronically, regardless of the number of partners.
Is Form 1065 for an LLC?
If the LLC is a partnership, normal partnership tax rules will apply to the LLC and it should file a Form 1065, U.S. Return of Partnership Income.
What is the purpose of Schedule K 1 on Form 1065?
Each owner must show their pro-rata share of partnership income, credits, and deductions on Schedule K-1 (1065). Generally, members of LLCs filing Partnership Returns pay self-employment tax on their share of partnership earnings.
Is there a late filing penalty for Form 1065?
Form 1065 must be filed by March 15th in the year following the tax year that it is being submitted for. A penalty of $195.00 will be incurred for each month that the form is late, up to a maximum of 12 months.
Do I need to file Form 1065 if my LLC made no money?
No. An LLC with no business activity that is taxed as a partnership is not required to file a partnership tax return unless there are expenses or credits that the LLC wants to claim.