What is IRS Form 1065? Complete Guide for U.S. Partnerships (2026)

What is IRS Form 1065? IRS Form 1065, officially titled the U.S. Return of Partnership Income, is the primary information return that partnerships file with the Internal Revenue Service (IRS) each year. Unlike corporations, partnerships are pass-through entities — they do not pay federal income tax at the entity level. Instead, they report all income, gains, losses, deductions, credits, and other items so that these amounts can be allocated to the partners via Schedule K-1 (Form 1065). Each partner then reports their share on their individual tax return (Form 1040 or equivalent).

This complete guide covers everything U.S. partnerships need to know about Form 1065 for tax year 2025 (returns filed in 2026), based exclusively on official IRS sources including the 2025 Instructions for Form 1065, About Form 1065 page, and related publications.

Who Must File IRS Form 1065?

Most domestic partnerships must file Form 1065 if they:

  • Engage in a trade or business,
  • Have gross income of $250 or more (or certain deductions/credits), or
  • Hold assets of $1 million or more at year-end.

Covered entities include:

  • General partnerships
  • Limited partnerships (LPs)
  • Limited liability companies (LLCs) taxed as partnerships (default for multi-member LLCs unless Form 8832 elects corporate taxation)
  • Religious or apostolic organizations under IRC §501(d)
  • Qualified derivatives dealers (QDDs) — mandatory filing regardless of other criteria

Foreign partnerships must file if they have:

  • Effectively connected income (ECI) with a U.S. trade or business, or
  • U.S.-source income (with limited exceptions: no ECI + ≤$20,000 U.S.-source income + <1% allocable to direct U.S. partners, or no U.S. partners with withholding satisfied).

Exceptions (no Form 1065 required):

  • Single-member LLCs (disregarded entities report on owner’s return)
  • Partnerships with no income or expenditures
  • Certain foreign partnerships meeting the low U.S.-income thresholds above

Note: Spouses operating an unincorporated business together are generally treated as a partnership and must file unless they elect qualified joint venture (QJV) status.

When Is Form 1065 Due in 2026?

For calendar-year partnerships (most common), the 2025 Form 1065 is due on March 16, 2026 (the 15th day of the third month after year-end; March 15, 2026 falls on a Sunday).

  • Fiscal-year partnerships: Due on the 15th day of the 3rd month following the end of their tax year.
  • Furnishing Schedule K-1: Partners must receive their K-1 (or substitute) by the same date the partnership files Form 1065.

Automatic 6-month extension: File Form 7004 by the original due date. This extends the filing deadline (e.g., to September 15, 2026 for calendar-year partnerships) but not the payment deadline for any taxes owed by partners.

Use IRS-designated private delivery services (PDS) for timely mailing proof if filing on paper.

How to File Form 1065? Electronic vs. Paper

Electronic filing is mandatory for most partnerships under IRS rules updated in recent years:

  • If the partnership files 10 or more returns of any type during the calendar year (including 1099s, W-2s, employment/excise taxes, etc.), or
  • Has more than 100 partners.

Exceptions/waivers:

  • Religious exemption (note “Religious Exemption” on paper return)
  • Hardship waiver request mailed/faxed to Ogden Submission Processing Center
  • Bankruptcy returns or pre-computed penalty/interest returns

Paper filing addresses vary by state and whether Schedule M-3 is attached (see Instructions for Form 1065, page 5 for the full table).

Recommended process:

  1. Use IRS-approved tax software or a qualified tax professional.
  2. Attach all required schedules and statements.
  3. E-file for faster processing and confirmation.

Key Sections and Schedules on Form 1065

  • Page 1: Income (gross receipts, cost of goods sold, etc.), deductions (salaries, guaranteed payments, depreciation, etc.), and ordinary business income (loss).
  • Schedule K: Summarizes all partners’ distributive shares of income, deductions, credits, etc.
  • Schedule K-1 (Form 1065): Issued to each partner showing their specific share. Partners use this on their personal returns. The partnership files copies with the IRS.

Example layout of Schedule K-1 (Form 1065) – Partner’s Share of Income, Deductions, Credits, etc.

  • Schedule L, M-1, M-2: Balance sheet, income reconciliation, and partners’ capital accounts analysis (required in many cases).
  • Schedule D: Capital gains and losses.
  • Schedules K-2 and K-3: International tax items (foreign taxes, credits, etc.) — required unless domestic filing exceptions apply.
  • Other common attachments: Form 4562 (depreciation), Form 8825 (rental real estate), Form 8990 (business interest limitation), Form 8949/8949 codes for digital assets, etc.

New for Tax Year 2025 (key updates from P.L. 119-21 “One Big Beautiful Bill Act” and other changes):

  • Domestic research & experimental (R&E) expenditures under new §174A are currently deductible (or elective amortization ≥60 months).
  • Expanded §181 deduction for qualified sound recording production costs (new code X on Schedule K/K-1 line 13).
  • New §1062 election for installment payment of tax on gain from sale of qualified farmland to qualified farmers (new code ZZ; partnerships must provide Form 1062 info and covenant).
  • Additional distribution codes on line 19 of Schedule K/K-1.
  • Direct deposit fields added for overpayments (lines 32b–32d).
  • Updated reporting for digital assets on Schedule B.
  • New/updated codes throughout Schedules K and K-1 (e.g., preformation expenditures code AZ, IRA UBTI EIN notes).

Penalties for Non-Compliance

  • Late filing of Form 1065: $210–$260 per partner per month (up to 12 months), inflation-adjusted.
  • Failure to furnish correct Schedule K-1 by deadline: $290–$310 per K-1 (higher maximums for large partnerships; intentional disregard has no limit).
  • Other penalties apply for inaccurate information, failure to e-file when required, or inconsistent treatment of items.

Reasonable cause can reduce or eliminate penalties — document everything.

Common Mistakes to Avoid

  • Missing the mandatory e-filing threshold.
  • Incorrect or late K-1 distribution to partners.
  • Failing to attach required statements for elections (§754, §743(b) basis adjustments, etc.).
  • Inconsistent reporting between partnership return and partners’ returns (triggers Form 8082).
  • Overlooking international schedules (K-2/K-3) or digital asset questions.
  • Not updating capital accounts under tax basis method.

Frequently Asked Questions (FAQs)

Do partnerships pay tax on Form 1065?
No — the form is purely informational. Tax is paid by the partners.

What if my LLC has only one member?
It is disregarded and files on the owner’s personal return (no Form 1065).

Can I file Form 1065 for a short tax year?
Yes — use the 2025 form and clearly indicate the short period.

Where can I get the latest Form 1065 and instructions?
Direct from IRS.gov/Form1065 (includes 2025 PDF forms, instructions, and prior-year versions).

Do I need a tax professional?
For most partnerships with multiple partners, complex allocations, international elements, or large assets — yes. Software helps, but professional review prevents costly errors.

Final Tips for Smooth Filing

Review the full 2025 Instructions for Form 1065 and Partner’s Instructions for Schedule K-1 at IRS.gov. Maintain accurate records for at least 3 years. Consider electing out of the centralized partnership audit regime (BBA) if eligible, or prepare for potential audits.

For the most current information, always check IRS.gov/Form1065 directly, as tax law and instructions can be updated.

This guide is for informational purposes only and is not tax or legal advice. Consult a qualified CPA or tax attorney for your specific situation.

Sources (all official and current as of February 2026):

  • IRS “About Form 1065” (last reviewed Jan 23, 2026)
  • Instructions for Form 1065 (2025) – Rev. Jan 2026
  • Form 1065 (2025) PDF and related schedules
  • Publication 541 (Partnerships) and Tax Calendar resources

File accurately and on time to avoid penalties and ensure your partners receive correct K-1s for their 2025 personal returns. If you have questions about your partnership’s specific filing requirements, the IRS e-Help Desk (866-255-0654) or a trusted tax professional are your best resources.