Schedule K-1 (Form 1065) is issued to foreign partners when a partnership has partners who are not U.S. persons for federal tax purposes.
This page explains why foreign partners receive Schedule K-1, what information it contains for non-U.S. partners, and how it fits into U.S. tax reporting, based on official IRS instructions.
For a general explanation of the form, see Schedule K-1 (Form 1065): Overview.
Who Is Considered a Foreign Partner
A foreign partner is a partner who is not a U.S. person for federal tax purposes.
This may include:
- Nonresident alien individuals
- Foreign corporations
- Foreign trusts or estates
The determination depends on tax status, not citizenship alone.
Why Foreign Partners Receive Schedule K-1
When a partnership has foreign partners, it must still report each partner’s distributive share of partnership income and other tax items.
Schedule K-1 is used to communicate this information to the foreign partner and to support required U.S. tax reporting and withholding.
Information Reported on Schedule K-1 for Foreign Partners
The structure of Schedule K-1 for foreign partners is generally the same as for U.S. partners.
It may include:
- The partner’s share of effectively connected income (ECI)
- Allocations of income, deductions, and credits
- Capital account information
- Distributions made during the tax year
Additional international tax details may be reported separately.
Schedule K-1 and U.S. Tax Withholding
For foreign partners, partnerships are generally required to withhold U.S. tax on certain types of income.
The withholding itself is not reported on Schedule K-1, but the K-1 provides information used to support withholding and reporting obligations.
Foreign partners may also receive additional forms related to withholding and international reporting.
Relationship Between Schedule K-1 and Schedule K-3
Foreign partners are more likely to receive Schedule K-3 in addition to Schedule K-1.
Schedule K-3 provides detailed international tax information that supplements the amounts reported on Schedule K-1.
Do Foreign Partners Have to File U.S. Tax Returns?
Receiving Schedule K-1 does not automatically determine a foreign partner’s filing obligations.
Whether a foreign partner must file a U.S. tax return depends on the type of income reported and applicable U.S. tax rules.
Schedule K-1 provides the information needed to determine those obligations.
Common Situations Involving Foreign Partners
- A nonresident individual invests in a U.S. partnership
- A foreign corporation holds an interest in a U.S. partnership
- A partnership has both U.S. and foreign partners
Related Situations and Guides
Official Form
The official Schedule K-1 (Form 1065) issued by the IRS is available here: