Tax Form 1065 is filed annually by Partnerships and LLCs to report the income, deductions and credits to the IRS.
The form aims to give the Revenue Service an overview of a partnership’s financial position with the goal of establishing a business’s tax liability. Although a partnership does not pay tax on its income, it “passes through” any profits or losses to its partners. This means that partners must include partnership items on their tax or information returns.
Who must file IRS Form 1065?
These entities need to complete Form 1065 on an annual basis:
Domestic partnerships
LLCs classified as partnerships for tax purposes.
nonprofit religious or apostolic organizations exempt from income tax under section 501(d)
Foreign partnerships with U.S. source income
Form 1065 instructions
Form 1065 is a five-page document that requires information from a variety of business financial documents. It is important to have up-to-date records that shows business income, deductions and credits, to complete the form accurately.
In addition to this financial information, there are other sections of the form that would require partners to have the following information on hand:
- General business information: Form 1065 requests some overall information about the nature of your business and its main product or service, business start date, business tax number, and more.
- Partner information: personal partner information such as names, addresses and social security numbers of each partner is required for completion in Form 1065.
- Financial allocations: Information relating to how the partnership’s taxable income is allocated to each partner based on their percentage ownership, information on partnership debt and investments etc. is required.
- K-1s: This section includes a Schedule K-1 for each partner, which shows the partner’s share of the partnership’s taxable income, deductions, and credits.
Once you have completed your 1065 Form, it is advisable to have the document reviewed by a CPA to ensure that everything is correct, before filing it. There are a number of forms you may need to submit in conjunction with Form 1065 depending on the nature of your Partnership and what you filled out on Form 1065. To ensure you have all the supporting forms and documentation attached, you can chat with a tax expert.
When to file Form 1065
Generally, a domestic partnership must file Form 1065 by the 15th day of the 3rd month following the date its tax year ended as shown at the top of Form 1065. For calendar year partnerships, the due date is March 15.
Certain partnerships with more than 100 partners are required to file Form 1065, Schedules K-1, and related forms and schedules electronically. For tax years beginning after July 1, as well as religious or apostolic organization exempt from income tax under section 501(d) must file, the form must be submitted electronically. Other partnerships generally have the option to file electronically.
Get more information on IRS electronic filing.
It is best practice for businesses to keep accurate financial records that showcases and justifies all income and expenses of a partnership. Software solutions such as QuickBooks and Netsuite can help you stay on top of the financial information required when filing Form 1065. Failure to file the relevant forms can result in penalties, so we encourage you to begin preparation on Form 1065 or contact a Fusion CPA as soon as possible, if you need help.
Our team can provide you with guidance on 1065 form instructions via a free discovery call.
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