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Partnership Returns

The Accounting Industry: Can Firms Keep Up?

Every partnership that operates in the United States has to file an information return on Form 1065. Operation the United States includes partnerships that engage in a trade or business or have gross income. This information return is used to report the income, gains, losses, deductions, credits, and other information pertaining to the operation of the partnership. A partnership that does not have any business activity or gross income is not required to file a 1065 for the year that it does not have anything. In addition, the partnership does not pay any tax on their tax return. The tax for the partnership passes through to the partners of the company.

The partners report their share of the partnership’s income and losses on their personal return, and thus, pay the tax for the partnership items. The deadline for filing a partnership return is March 15th. However, if this date falls on a weekend or a legal holiday, then the return must be filed by the next day after. In order to get an extension for filing a partnership return, the taxpayers must file an Application for Automatic Extension of Time to File Certain Business Income Tax (Form 7004) by the regular due date of the partnership return. The IRS will only notify the filer if the extension is not approved, otherwise, the filers have an automatic extension period of 6 months. A partnership can incur penalties if it fails to file the return by the due date, including extensions, or files a return that is missing required information. These two circumstances only affect partnerships that are required to file partnership returns.

By: Brooke Williams, Tax Senior at CROFT & FROST


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