What IRS Form 1065 (2019) Is For
IRS Form 1065 (2019) is the official federal tax return that a partnership files to report its business income, deductions, gains, losses, and credits for the 2019 tax year. The form provides a detailed report of the partnership’s income and expenses to the IRS. Partnerships don’t pay income tax directly; instead, they pass profits and losses through to their partners, who include them on their individual tax returns using Schedule K-1. The partnership must file all required tax returns and provide each partner with their K-1 to remain compliant under federal law.
A partnership is formed when two or more people join to carry on a business or trade. Each partner contributes money, property, or services and shares in the partnership's profits and losses. The IRS requires these entities to file Form 1065 annually, showing the partnership’s income, deductions, and capital information on behalf of all members.
When You'd Use Form 1065 for 2019 (Late or Amended Filing)
You must still file a 2019 Form 1065 if you missed the original filing deadline or need to amend information previously reported. Late or amended filing may occur when a partnership fails to meet its responsibility to file, receives IRS notices demanding the return, or discovers an error that affects partners’ income tax or self-employment tax.
You should file a 2019 partnership return if you:
- Never Filed the Original Return: The original due date was March 16, 2020.
- Received an IRS Notice: The IRS may send CP letters requesting missing information or compliance.
- Need to Correct Errors: Amendments are made using Form 1065-X or by submitting a corrected return.
Common reasons for late filing include unreported income, incorrect deductions, or missing Schedule K-1s. Filing ensures that partners can amend their individual returns, avoid escalating penalties, and maintain eligibility for certain credits or relief programs under the CARES Act and other government provisions.
Key Rules Specific to 2019
The 2019 tax year included several updates that partnerships must still follow:
- Centralized Audit Regime: The second year of the Bipartisan Budget Act (BBA) audit rules required most partnerships to file under a centralized review system. Small partnerships with 100 or fewer eligible partners could elect out by submitting Schedule B-2, Part II.
- Penalties: The late filing penalty was $200 per partner per month (maximum of 12 months), which is lower than the current rates. The IRS imposes these fees to ensure partnerships file timely and accurate tax returns.
- Special CARES Act Provisions: Partnerships could file amended returns before September 30, 2020, under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to claim benefits, refunds, or adjustments for the 2019 tax year.
For complete details on wage reporting, withholdings, and unemployment tax filings, see our guide to Business Income Tax Forms.
Step-by-Step (High Level)
Filing Form 1065 requires careful preparation to ensure that income, credits, and partner details are correct:
- Gather Transcripts: Request partnership transcripts from IRS.gov or by calling 800-908-9946 to review previous filings, penalties, or correspondence.
- Complete the Correct-Year Form: Use the 2019 version of Form 1065 to accurately report the partnership’s income, deductions, and capital changes.
- Prepare Schedule K-1s: Provide each partner with a Schedule K-1 that shows their share of profits, losses, deductions, and credits.
- Attach Required Schedules: Include Schedule B, Schedule K, and any supporting forms related to property, interest, or employment taxes.
- File the Return: E-filing is required if the partnership has more than 100 partners; smaller partnerships may mail the completed form to the IRS center listed on the instructions.
- Keep Records: Maintain copies of all tax forms, payments, and correspondence for a minimum of seven years.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
Errors on Form 1065 can lead to penalties or partner-level adjustments:
- Missing Schedule K-1s: Provide each partner with a complete and accurate K-1 to avoid the $270-per-partner penalty.
- Incorrect partner basis calculations: Verify all capital contributions, profits, and losses before filing to ensure Schedule K-1, Item L, reflects the correct basis.
- Incomplete Schedule B: Answer every question regarding foreign partners, property transfers, and credit eligibility to prevent processing delays or IRS inquiries.
- Improper audit elections: If eligible, elect out of the BBA centralized audit regime promptly to avoid unwanted entity-level assessments.
- Mixing entity and partner-level items: Report partnership income and deductions correctly at the partner level, noting that only withholding under Section 1446 applies to the entity.
What Happens After You File
After submission, the IRS reviews the return for accuracy, payment status, and compliance with applicable tax laws.
- Processing Time: Expect 12–16 weeks for processing, with a more extended timeframe if the return is mailed.
- IRS Notices: The IRS may contact the partnership regarding missing information, employment taxes, excise taxes, or corrections.
- Penalty Handling: Partnerships cannot establish direct payment plans; penalties are assessed individually to partners.
- Appeals: Disputes can be addressed under BBA rules or, if opted out, under TEFRA procedures.
- Partner Notifications: The IRS may issue correspondence to partners about adjustments, refunds, or their share of the partnership’s income.
FAQs
What is IRS Form 1065 2019 used for?
IRS Form 1065 2019 reports a partnership’s income, deductions, gains, and losses for the 2019 tax year. The partnership files the form to show business performance and allocates profits through Schedule K-1 to partners for their individual income tax reporting.
How does the self-employment tax apply to partnerships?
Partners must pay self-employment tax on their share of the partnership’s profits if they actively participate in the business. This tax covers Social Security and Medicare taxes under the Federal Insurance Contributions Act, which helps fund government programs and economic security benefits.
How do employment taxes and excise taxes affect a partnership?
Employment taxes apply to payments made to employees, including Social Security, Medicare, and federal unemployment tax. Certain partnerships may also be subject to excise taxes if they produce or sell specific goods or services. Filing and paying on time helps avoid penalties and ensures compliance with federal law.
What role did the Economic Security Act and the CARES Act play for 2019 partnerships?
Both the Economic Security Act and the CARES Act provided temporary tax relief to small businesses during the coronavirus pandemic. These laws allowed eligible partnerships to amend prior tax returns, request refunds, or claim additional credits and deductions related to losses or expenses.
How do tax returns and Schedule K-1 work together?
Each partnership files one Form 1065 tax return reporting total income, deductions, and credits. Schedule K-1 divides this information among partners, showing each person’s share of the income and losses. Partners then include this data in their individual returns, ensuring proper tax and payment reporting.
How does Title V affect partnership reporting?
Title V of the Social Security Act outlines specific programs related to health and labor support. While not directly changing partnership filing rules, it connects to tax provisions that fund social programs through employment taxes. Partnerships must accurately report employee-related payments and benefits when filing Form 1065.
