# What is Form 1065 (Partnership Return)?

Country: United States

Form 1065 is the annual return for US partnerships and multi-member LLCs taxed as partnerships, due 15 March for calendar-year filers. The partnership does not pay federal income tax; profits flow to partners via Schedule K-1.

## Example

A 2-member LLC (default partnership taxation) files Form 1065 by 15 March 2025. Each member receives a K-1 reflecting their distributive share of profit.

## How Form 1065 (Partnership Return) works in United States

Form 1065 is the annual return for US partnerships and multi-member LLCs (which are taxed as partnerships by default). Like the S-corp Form 1120-S, the partnership itself pays no federal income tax: profit flows to partners through Schedule K-1s, and partners pay tax on their respective shares.

**Who must file Form 1065**

- Domestic partnerships (general and limited)
- Multi-member LLCs that have not elected C-corp or S-corp treatment
- Foreign partnerships doing business in the US
- Real estate investment groups with two or more owners

**Filing deadline**

- Calendar-year partnerships: 15 March (15th day of 3rd month after year-end)
- Same as S-corp deadline, one month before the personal return deadline
- 6-month automatic extension via Form 7004 (to 15 September)

**Schedule K-1 to partners**

Each partner receives a K-1 showing their distributive share of:
- Ordinary business income or loss
- Net rental income
- Interest, dividends, royalties
- Net short-term and long-term capital gains
- Section 179 deduction
- Self-employment income (for general partners and active LLC members)
- Credits (R&D credit, investment credit, etc.)

General partners and active LLC members pay self-employment tax on their share of ordinary income. Limited partners and passive members generally do not.

**Late filing penalty**

$235 per partner per month (or partial month), up to 12 months. A 3-partner LLC filed 3 months late: $235 × 3 × 3 = $2,115.

**Guaranteed payments**

Payments to partners for services (similar to salaries) are called 'guaranteed payments.' They appear on the K-1 and are deducted on the partnership return. Guaranteed payments are subject to self-employment tax.

**Basis and at-risk rules**

Like S-corp shareholders, partners must track their basis (includes share of partnership debt, unlike S-corp where only direct loans count). Losses limited to basis and 'at-risk' amounts. Passive activity rules may further limit loss deductions for passive investors.

Source: https://www.irs.gov/forms-pubs/about-form-1065

## Related terms

- [LLC (Limited Liability Company)](https://accounts-os.com/us/glossary/llc-us)
- [Form 1120-S (S-Corp Annual Return)](https://accounts-os.com/us/glossary/form-1120s)