A multi-member LLC files IRS Form 1065, the U.S. Return of Partnership Income, as its default federal tax form. Along with that return, the LLC issues each owner a Schedule K-1 reporting their share of the business’s income, deductions, and credits, which each owner then carries onto their personal Form 1040.1Internal Revenue Service. About Form 1065, U.S. Return of Partnership Income The LLC itself pays no federal income tax; profits and losses pass through to the members.
Why Form 1065 Is the Default
The IRS automatically treats a domestic LLC with two or more members as a partnership unless the LLC files paperwork electing a different classification.2Internal Revenue Service. Limited Liability Company (LLC) As a partnership, the LLC files Form 1065 every year. It is an informational return: it reports total income, gains, losses, deductions, and credits, but no tax payment goes with it.1Internal Revenue Service. About Form 1065, U.S. Return of Partnership Income The IRS uses the return to track how money moves through the business and to verify that each member reports their share correctly.
Smaller LLCs get a paperwork break. If the partnership’s total receipts were under $250,000 and its total assets were under $1 million at year-end, it can skip Schedules L, M-1, and M-2 when filing Form 1065, provided all Schedules K-1 are filed on time.3Internal Revenue Service. Form 1065 – U.S. Return of Partnership Income 2025 Larger LLCs have to include those schedules, which means keeping detailed year-end balance sheets and reconciliation records.
Schedule K-1 and Each Member’s Personal Return
Along with Form 1065, the LLC prepares a Schedule K-1 for every member. Each K-1 shows that person’s share of income, deductions, and credits based on the ownership percentages set out in the operating agreement.1Internal Revenue Service. About Form 1065, U.S. Return of Partnership Income One copy goes to the member, another to the IRS, so the agency can match what each member reports on their own return.
When you receive your K-1, you transfer the figures to your personal Form 1040. Ordinary business income or loss generally goes on Schedule E, line 28.4Internal Revenue Service. 2025 Partner’s Instructions for Schedule K-1 (Form 1065) The IRS compares the data on your K-1 to the numbers on your personal return, so mismatches often trigger follow-up notices or audits.
Self-Employment Tax and Estimated Payments
Unlike wages from a traditional employer, LLC income is not subject to automatic withholding. Each member who materially participates in the business owes self-employment tax on their share of the LLC’s net earnings. The rate is 15.3 percent: 12.4 percent for Social Security and 2.9 percent for Medicare.5Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) The Social Security portion applies only to the first $184,500 of combined wages and self-employment earnings in 2026; the Medicare portion has no cap.6Social Security Administration. Contribution and Benefit Base You calculate this tax on Schedule SE and attach it to your Form 1040.7Internal Revenue Service. 2025 Schedule SE (Form 1040) – Self-Employment Tax
Because nothing is withheld from your LLC income, you typically need to make quarterly estimated tax payments to cover income tax and self-employment tax together. The 2026 due dates are:
- First quarter: April 15, 2026
- Second quarter: June 15, 2026
- Third quarter: September 15, 2026
- Fourth quarter: January 15, 2027
You can skip the January 15 payment if you file your full 2026 return and pay the balance by February 1, 2027.8Internal Revenue Service. Form 1040-ES – 2026 To avoid an underpayment penalty, pay at least 90 percent of your current-year tax liability or 100 percent of the prior year’s tax, whichever is smaller.9Internal Revenue Service. Estimated Taxes
When Form 1065 Is Due
Form 1065 is due by the 15th day of the third month after the close of the LLC’s tax year. For calendar-year LLCs, that means March 15.10Internal Revenue Service. 2025 Instructions for Form 1065 – U.S. Return of Partnership Income That is a month earlier than the April 15 individual deadline, so members need the K-1s well before their personal returns are due.
If the LLC cannot meet March 15, filing Form 7004 before the due date grants an automatic six-month extension, moving the deadline to September 15 for calendar-year filers.11Internal Revenue Service. Instructions for Form 7004 The extension only postpones the return. Members still have to pay estimated taxes on their normal schedule.
Late-Filing Penalty
Missing the deadline without an approved extension triggers a penalty of $255 per member for each month, or partial month, the return is late, up to 12 months.10Internal Revenue Service. 2025 Instructions for Form 1065 – U.S. Return of Partnership Income For a four-member LLC, that is $1,020 per month and a maximum of $12,240. The penalty applies even though the LLC owes no income tax; it is a penalty for the late informational return.12Office of the Law Revision Counsel. 26 U.S. Code 6698 – Failure to File Partnership Return The IRS may waive the penalty if the LLC can show reasonable cause for the delay.
Electing a Different Tax Form Instead
The default partnership treatment fits many LLCs, but two elections are available if a different classification works better.
C-Corporation (Form 8832)
Filing Form 8832 lets your LLC be taxed as a C-corporation instead of a partnership.2Internal Revenue Service. Limited Liability Company (LLC) Once the election takes effect, the LLC files Form 1120 each year instead of Form 1065. The election can take effect no earlier than 75 days before you file Form 8832 and no later than 12 months after.13Internal Revenue Service. Form 8832 – Entity Classification Election C-corporation status means the business pays its own income tax and members are taxed again on distributions, the double taxation partnership treatment avoids.
S-Corporation (Form 2553)
Filing Form 2553 elects S-corporation status and shifts annual reporting to Form 1120-S.14Internal Revenue Service. About Form 2553, Election by a Small Business Corporation An LLC filing Form 2553 does not need to file Form 8832 first; the S-corporation election itself causes the IRS to treat the LLC as a corporation on the election’s effective date. To take effect for the current tax year, the form must be filed no later than two months and 15 days after the start of that tax year. A later filing pushes the election to the following year, though late-election relief is available in some situations.15Internal Revenue Service. Instructions for Form 2553
S-corporation treatment still passes income through to members, but members who work in the business pay themselves a reasonable salary subject to regular payroll taxes. Profit distributed beyond that salary is not subject to self-employment tax, which is the main reason LLCs make this election.
State Filings Are Separate
Federal Form 1065 does not satisfy your LLC’s state obligations. Most states require LLCs to file an annual or biennial report with the secretary of state, with fees that vary widely. Some states also impose an entity-level tax, franchise tax, or filing fee directly on the LLC, separate from any income tax members owe on their personal state returns. Check your state’s secretary of state office and department of revenue to confirm what your LLC owes beyond its federal return.