Partnership Tax
Form 1065, K-1, K-2 & K-3.
Complete Partnership Tax Filing.
Multi-member LLCs, limited partnerships, and investment partnerships — we handle the full annual compliance stack including Form 1065, Schedule K-1 issuance, K-2/K-3 international reporting, foreign partner withholding (Forms 8804/8805), and LP tax assistance.
What's included
US partnerships — including multi-member LLCs, limited partnerships, and investment vehicles — do not pay federal income tax directly. Instead, income, deductions, and credits flow through to each partner who reports them on their own return. Form 1065 is the annual return that documents these allocations, due March 15 each year.
For partnerships with international elements — foreign partners, foreign investments, or cross-border income — the compliance stack deepens significantly. Schedule K-2 (filed by the partnership) and Schedule K-3 (issued to each affected partner) capture all international tax items, including foreign income, GILTI, FDII, and foreign tax credit information. These schedules were introduced in 2021 and catch many CPA firms off guard.
Our partnership tax practice covers the complete annual stack: Form 1065, Schedules K/K-1/K-2/K-3, state partnership returns, withholding compliance for foreign partners (Forms 8804, 8805, 8813), 1042/1042-S where applicable, and K-1 delivery and interpretation support for all partners including LPs.
Who this is for
Multi-member LLCs and limited partnerships with domestic or international partners. Investment partnerships (VC funds, private equity, family offices). Real estate partnerships. Operating companies structured as partnerships. Any partnership with non-US partners that has withholding obligations.
We also assist individual limited partners — particularly foreign LPs in US funds — who receive K-1s and need help understanding what each line means for their US and home-country tax filing obligations.
Our process
Partner Information Collection
We gather partner tax identification, capital accounts, ownership percentages, and any international tax information needed for K-2/K-3.
Income & Allocation Review
We review the partnership's books, confirm profit and loss allocations per the partnership agreement, and identify all special allocations.
Return Preparation
We prepare Form 1065, all required Schedules (B, K, K-1, K-2, K-3, M-1, M-2), state returns, and any ancillary forms (8804, 8805, 8308, 1042).
K-1 Distribution & LP Support
We deliver K-1s to all partners, provide interpretation support for foreign LPs, and advise on how to report K-1 income on home-country filings.
Frequently asked questions
Every US partnership — including multi-member LLCs taxed as partnerships — must file Form 1065 annually. This includes partnerships where all partners are foreign nationals, and foreign partnerships with US-source income or US partners. The deadline is March 15 (or September 15 with a timely extension).
Schedule K-1 reports each partner's share of domestic income, deductions, credits, and other items. Schedule K-2 is filed by the partnership and captures all items with international tax relevance (foreign income, GILTI, foreign tax credits). Schedule K-3 is the partner-level equivalent of K-2 — each partner who needs international tax information receives one. K-2 and K-3 were introduced for tax years beginning in 2021.
No — the IRS provides a domestic filing exception if the partnership has no foreign activity, no foreign partners, and no partners who would need foreign tax credit information. However, most partnerships with non-US partners, foreign investments, or cross-border income must file K-2/K-3. We evaluate applicability for every engagement.
Under IRC Section 1446, partnerships must withhold US tax on the share of effectively connected income (ECI) allocable to foreign partners. The withholding rate is 37% for individual foreign partners and 21% for foreign corporate partners. Quarterly deposits are required using Form 8813. The annual return is Form 8804, and each foreign partner receives Form 8805.
Yes. We provide K-1 interpretation assistance to foreign limited partners who need to understand what each line item means for their home-country tax filing. We also advise on treaty positions, foreign tax credits, and PFIC considerations for LPs invested in funds with foreign portfolio companies.
The penalty for a late partnership return is $220 per partner per month (or fraction of a month), up to 12 months. For a 10-partner partnership, that's $2,200 per month — a strong incentive to file on time or secure a timely extension using Form 7004.