What is Form 1065?

Form 1065 is the annual information return filed by partnerships to report income, deductions, gains, and losses, with each partner receiving a Schedule K-1 showing their share for inclusion on their personal return. For professional service firms structured as partnerships or multi-member LLCs, Form 1065 is the required business tax return.

Key characteristics

• Partnership information return

• Reports income and deductions

• Generates Schedule K-1 for partners

• Due March 15 (calendar year)

• No tax paid at the partnership level

• Pass-through to partners

Why it matters for professional service firms

Form 1065 determines how partnership income flows to partners. Late filing triggers penalties per partner per month. Professional service firms operating as partnerships must file Form 1065 timely and ensure K-1s are distributed to partners for their personal returns.

Real-world example

Jennifer and her partner operated a consulting LLC taxed as a partnership. Form 1065 reported: gross receipts $580,000, deductions $185,000, ordinary income $395,000. Each partner received a K-1 showing 50% share ($197,500). K-1 amounts reported on each partner's Form 1040. Partnership paid no tax; partners paid tax on their shares. Filed by March 15 to avoid a $220 per partner monthly penalty.