Form 8865
IRS, U.S. Persons With Respect to Certain Foreign Partnerships
The information return for US persons with interests in a foreign partnership, including many UK partnerships and some UK LLPs.
What is Form 8865?
A UK partnership or LLP with an American partner can create a Form 8865 filing. The form is organised by category, and the category decides how much of the partnership's information the American has to produce. UK partnerships rarely prepare anything in the shape the IRS expects.
An American partner in a UK partnership
The first question is classification. A UK general partnership or limited partnership is normally a partnership for US purposes.
A UK LLP is less certain: its default US classification depends on how the default rules apply to it, and an election can change the result. The answer decides whether Form 8865, Form 5471 or neither applies, so it should be settled before anything else is prepared.
Once a partnership is in view, the categories do the sorting. Controlling more than half the partnership puts the American in the heaviest category, with full accounts required. Smaller holdings can trigger lighter categories, and so can contributing property or acquiring or disposing of an interest above set limits. The American's share of income also belongs on Form 1040 each year, whether or not the partnership distributed anything, and UK tax paid on it can support a foreign tax credit.
Form 8865 is attached to the partner's own return and follows its due date. Where several US partners share the same obligation, one filer can sometimes report on behalf of the others if the conditions in the instructions are met. Penalties apply for failure to file, and the statute of limitations can stay open. UK partnership accounts need restating under US principles and translating into dollars before they are usable.
At a glance
- The partner's income tax return
- Attached to
- With that return, including extensions
- Due
- Whether the UK entity is a partnership for US purposes
- Key question
- Partner's share taxed yearly, distributed or not
- Income
Figures are for the tax year stated in the official instructions linked below.
How we handle it
- International Tax
US reporting for owners of UK companies and partnerships, and for UK groups with US entities, including Forms 5471, 8858, 8865 and 5472.
- Cross-Border Tax
US and UK returns prepared together from one set of workpapers, so credits, tax years and exchange rates line up across both.
- Treaty Relief
Claims under the US/UK income tax treaty, with Form 8833 disclosure, residence tie-breaker analysis and reduced withholding on US income.
- Business Tax Returns
US federal returns for companies, partnerships and LLCs with UK owners, UK parents or UK operations, prepared alongside the UK accounts.
Where people go wrong
The Form 8865 errors we correct most often.
Who files it
- US citizens who are partners in UK professional firms
- Americans contributing property to a UK partnership
- Green card holders investing through UK limited partnerships
- US persons buying or selling a significant partnership interest
01
Assuming every UK LLP is automatically a partnership for US purposes
02
Reporting only distributions rather than the full share of partnership income
03
Missing a filing triggered by a contribution rather than by ownership
04
Using UK partnership figures without restating them under US principles
Why US UK Tax Returns
Every form is prepared against the official instructions, and every position on it is one we can point to in the Code, the treaty or HMRC's guidance.
One File
US and UK returns prepared in the same engagement and reconciled line by line.
Primary Sources
Every position traced to the Code, the treaty, IRS instructions or HMRC guidance.
Scope First
Returns, forms, years and fee agreed in writing before work begins.
The Same People
The team that files this year carries the elections and credits into the next.
Questions we are asked
I am a salaried partner in a UK LLP. Do I need Form 8865?
It depends first on how the LLP is classified for US purposes and then on your interest in it. A salaried member with no real capital interest may fall outside some categories but still have income to report. If the LLP is treated as a corporation, a different form may apply instead. The member agreement and the LLP's classification history are the documents to start from.
The partnership did not pay me a distribution this year. Is there still US tax?
Usually yes. A partner is taxed on their share of partnership income as it is earned, not when it is paid out. UK tax on the same share, typically paid through Self Assessment, can support a US foreign tax credit. The timing of the two tax years can make the credit fall in a different US year from the income, which needs tracking.
Can the partnership file Form 8865 for all the American partners?
In some cases one US partner can file for others who share the same category, provided the conditions in the instructions are met and the others attach the required statement to their own returns. Many UK firms will not take on US filings at all, so each American partner often has to assemble their own information from what the firm provides.
Primary sources
What this page says is drawn from the official material below. Read it yourself; we would rather be checked than trusted.
Last reviewed
From the Blog
Need Form 8865 prepared or reviewed?
Tell us where you live, what you hold and which years are outstanding. We will say what applies and what it involves before any work begins.
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