Form 1065 Guide for Australians: U.S. Partnership Tax in 2025

If you’re an Australian with investments in U.S. partnerships, or you’re part of a cross-border business venture, you’ve likely heard whispers about Form 1065. While it’s a staple of the American tax system, Form 1065 has real consequences for Aussie investors and business owners who have a foot in the U.S. market. With the IRS introducing new compliance measures and digital reporting mandates in 2025, understanding this form is more important than ever.

What is Form 1065 and Who Needs to File?

Form 1065 is the U.S. Internal Revenue Service (IRS) tax return for partnerships. It’s not a tax bill, but an information return that reports a partnership’s income, deductions, gains, losses, and other financial details. If you’re an Australian who owns an interest in a U.S. partnership—whether that’s a property syndicate, venture capital fund, or joint business venture—Form 1065 is almost certainly in your orbit.

• Who files: U.S.-registered partnerships, including LLCs taxed as partnerships

• Why it matters to Australians: Aussie individuals and businesses with U.S. partnership interests may be required to report their share of partnership income—even if they don’t receive a cash distribution

• Key deadline: For tax year 2024, Form 1065 is due by March 17, 2025 (or the 15th day of the third month after the partnership’s tax year ends)

Each partner receives a Schedule K-1, detailing their share of the partnership’s income, which must then be reported on their own tax returns, both in the U.S. and potentially in Australia under ATO foreign income rules.

What’s New in 2025? IRS Compliance and Digital Reporting Updates

The IRS has ramped up its focus on cross-border compliance and digital filing for 2025, and Form 1065 is no exception. Here are the headline changes Australian investors should note:

• Mandatory e-filing: Starting in 2025, all partnerships with more than 10 partners or $10 million in assets must file Form 1065 electronically. Manual paper filings will only be accepted in rare cases.

• Enhanced foreign partner disclosure: There are new requirements for U.S. partnerships to disclose detailed information on foreign partners, including Australian individuals and entities. Expect more requests for your Australian tax file number (TFN) or equivalent identification.

• Increased scrutiny of “effectively connected income” (ECI): The IRS is targeting partnerships with foreign partners that generate ECI, which is income connected to U.S. trade or business. This can affect real estate, consulting, and digital services ventures involving Australians.

• Faster turnaround on Schedule K-1s: Many partnerships are moving to digital delivery of K-1s, which can help Australian investors meet ATO reporting timelines for foreign income more efficiently.

For Australians, these changes mean more transparency—and less room for error or delay. Cross-referencing your Schedule K-1 with your ATO tax return is vital, as the ATO and IRS increasingly share data.

Real-World Scenarios: How Form 1065 Impacts Australians

Let’s look at two common scenarios for Australians:

1. Investing in a U.S. Property Syndicate

Suppose you join a U.S. property partnership that owns residential or commercial real estate. Each year, the partnership files Form 1065, and you receive a Schedule K-1. Even if profits are reinvested and you see no cash, your share of rental income, capital gains, and depreciation must be reported on your Australian tax return. With 2025’s digital K-1s, you’ll get this information sooner, but you’ll also need to be more proactive about currency conversion and dual reporting.

2. Partnering in a U.S. Tech Startup

Many Australian entrepreneurs collaborate with U.S. partners via LLCs or limited partnerships. If your business is taxed as a partnership in the U.S., you’ll need to ensure Form 1065 is filed—regardless of whether you operate from Sydney, Melbourne, or Brisbane. New 2025 e-filing rules mean you’ll likely need a U.S. tax agent or CPA familiar with both IRS and ATO requirements.

Best Practices for Aussies Dealing with Form 1065

• Stay ahead of deadlines: Mark the March 17, 2025 deadline (for calendar-year partnerships) and set reminders for obtaining your Schedule K-1.

• Coordinate with your tax advisor: Choose someone with cross-border expertise who understands both U.S. and Australian tax rules.

• Review your K-1 carefully: Make sure your income, losses, and foreign tax credits are accurately reported. Errors can trigger ATO or IRS audits.

• Keep good records: Maintain digital copies of all partnership documents, tax returns, and K-1s, especially with increased digital reporting in 2025.

Conclusion: Why Form 1065 Matters More Than Ever in 2025

For Australians with U.S. partnership interests, Form 1065 isn’t just an American tax form—it’s a vital compliance document that can impact your ATO filings, tax credits, and even your investment returns. The IRS’s push toward digital compliance, plus stricter foreign partner disclosures, means now is the time to get proactive. Stay organised, partner with the right advisors, and ensure your U.S. and Australian tax filings line up.