Complete Guide to Form 1065: What It Is and When to File

Expanding a business to the United States involves fulfilling various legal and tax obligations. One of them is the filing of Form 1065, which applies to certain types of companies, especially those structured as partnerships. If you have a company or are planning to form an LLC in the U.S. with more than one member, this form may play an important role in your tax life.

What Is Form 1065?

Form 1065, officially titled U.S. Return of Partnership Income, is a document that partnerships in the United States must file with the IRS (Internal Revenue Service). It is not a form used to pay taxes directly, but to report the income, deductions, and profits of the partnership.

A partnership does not pay income taxes as an entity. Instead, its profits or losses “pass through” to the partners, who then report them on their individual tax returns. Therefore, Form 1065 is informational in nature: it helps the IRS determine how much each partner must report.

Who Must File Form 1065?

Form 1065 must be filed by all businesses organized as:

• Partnerships
• Limited Liability Companies (LLCs) with two or more members that have not elected to be taxed as a corporation

If you have a single-member LLC, you generally do not need to file Form 1065. In that case, your LLC is considered a “disregarded entity” and you report income on your personal return using Form 1040 and Schedule C.

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What’s the Purpose of Form 1065?

The form is used to report the entity’s gross income, deductions, gains, and losses. One of its key components is that it generates the Schedule K-1 for each partner — a document that outlines each partner’s share of the company’s financial activity. Each partner must then include their K-1 information in their own tax return.

What Information Is Included in Form 1065?

Form 1065 is divided into several sections. Here's an overview of the key information required:

1. General Information

• Legal business name
• Business address
• Employer Identification Number (EIN)
• Date of formation
• Type of business activity

2. Income

• Gross sales
• Cost of goods sold
• Net income

3. Deductions

• Operating expenses
• Salaries and wages
• Rent
• Depreciation
• Interest and other business expenses

4. Capital Analysis

• Partner equity changes
• Capital contributions
• Withdrawals

5. Schedule B

• Additional questions about ownership structure, foreign involvement, and investments

6. Schedule K

• Aggregated totals of income, deductions, credits, and other tax-related items — later distributed via each partner’s K-1

What Is Schedule K-1?

Schedule K-1 (Form 1065) is the individual report generated for each partner, outlining their share of profits, losses, credits, and other key items. Each partner uses this document to complete their personal tax return (Form 1040).

For foreign partners, additional withholding obligations or tax filings may apply, such as Form 8805 or Form 1040-NR.

When Is Form 1065 Due?

Form 1065 is typically due by March 15 each year (for partnerships using the calendar year). If the deadline falls on a weekend or holiday, the due date is extended to the next business day.

Need more time? You can request a 6-month extension using Form 7004, pushing the due date to September 15. Keep in mind: this extension does not apply to each partner’s individual tax return, so the K-1s must be ready on time.

What Happens If You Don’t File Form 1065?

Failing to file this form can lead to significant penalties. The IRS can impose fines of $220 USD per partner per month, up to 12 months maximum.

Moreover, if partners don’t receive their K-1s on time, they may be unable to properly file their individual returns — potentially leading to further penalties.

What Documents Do You Need to Prepare Form 1065?

To complete and submit Form 1065 accurately, you’ll need:

• Your company’s EIN
• Financial statements (income, expenses, operating costs)
• Updated partner information
• Records of capital contributions and distributions
• Documentation of applicable deductions and tax credits

Having a solid bookkeeping system is crucial for accurate and timely reporting.

Is It Difficult to File Form 1065?

It can be a technical process, especially if:

• You have multiple partners
• There are foreign partners involved
• The partnership has complex deductions or income sources
• There have been structural changes in the business

What If You Have International Partners?

If your partnership or LLC has non-resident partners, additional U.S. tax obligations apply:

• Mandatory tax withholding on the foreign partner’s share of income
• Filing of Forms 8804 and 8805
• The foreign partner may also need to file Form 1040-NR

In these cases, having expert international tax support is highly recommended.

Where Do You File Form 1065?

Today, Form 1065 can be filed electronically via an IRS-authorized e-filing provider or with the help of a qualified accountant.

In some cases — especially for partnerships with fewer than 100 partners — it may also be filed by mail to the IRS address based on the entity’s state of residence.

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Conclusion

Form 1065 is critical for partnerships and multi-member LLCs in the U.S. While it doesn't trigger a direct tax payment, it ensures that income and losses are correctly distributed and reported by all partners.

As a Latin American entrepreneur operating or selling in the U.S., keeping your accounting in order and complying with IRS reporting obligations helps you avoid penalties and maintain credibility with partners, clients, and authorities.

At Openbiz, we guide you through every step — from forming your LLC to monthly accounting and filing important tax forms like 1065, 1120, or your personal tax return.

Frequently Asked Questions About Form 1065

Do I need to file if I have a single-member LLC?
No, unless you've elected to be taxed as a corporation. Single-member LLCs are typically taxed as individuals using Form 1040 and Schedule C.

What is the purpose of Schedule K-1?
It breaks down each partner’s share of the business’s financial activity, which they must report in their personal tax returns.

Can I request an extension to file Form 1065?
Yes. You can request a 6-month extension using Form 7004 — but partners still need their K-1s on time for their own filings.

What if one of the partners is not a U.S. resident?
You’ll likely need to withhold taxes on their behalf and file additional forms like 8805 and 1040-NR.

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