Partnership deadline September 15: $255 per partner per month

It's the sentence almost every European founder hears for the first time when things are already on fire. Under US tax law, an LLC is not a tax category of its own. Unless it elects otherwise, it is slotted into an existing category based on how many members it has.

With a single member, it is treated as an extension of that member. With two or more, it is a partnership for tax purposes. A married couple who form an LLC together almost always have a partnership. So do two friends who split the shares.

A partnership pays no federal income tax itself. Its profit is allocated to the partners, who pay tax on it personally. But it must file its own return every year, Form 1065, and send each partner a statement of their share, Schedule K-1. And that return is exactly what next week's deadline is about.

Under the IRS instructions for Form 1065, a partnership return is due on the 15th day of the third month after the end of the tax year. For a calendar year, that's March 15. Because March 15, 2026 fell on a Sunday, this year's deadline was March 16.

If you weren't ready by then, you could request an extension with Form 7004. It is granted automatically and runs for six months. For calendar-year partnerships, it ends on September 15. There is no second extension.

The same applies to S corporations, which are popular in America but generally not an option for owners without US tax status. For a regular C Corporation, by contrast, the extended deadline doesn't run out until October 15.

This is where it gets concrete, and expensive. The IRS charges a penalty for a late partnership return that isn't based on profit or on any tax owed, but on headcount.

For returns due in 2026, it is $255 for each month or part of a month the return is late, for up to twelve months, multiplied by the number of people who were partners during the year. The penalty applies even if the company made a loss and nobody owes a cent in tax.

On top of that comes a second penalty for every Schedule K-1 that doesn't reach the partner on time or complete: $340 per statement.

The two each own half of their Texas LLC. In 2025 the roastery made a profit of $80,000, or $40,000 each.

If they miss the deadline by three months and file in December, the penalty is $255 times three months times two partners: $1,530. If both K-1s are late too, add another $680. That's $2,210 in total, for a slip that one focused week of work would have prevented.

If they let it slide entirely, the penalty reaches $6,120 after twelve months. With four partners, it would be $12,240.

And then there's their own share. Because Lena and Matthias aren't US taxpayers in the usual sense, their LLC must withhold tax on their share of the profit and pay it to the IRS. Under the instructions for Form 8804, that's 37 percent of allocated profit for individuals and 21 percent for corporate partners. On $40,000, that's $14,800 per person. This isn't an extra tax but a prepayment credited against their personal US return. If their actual tax is lower, they get the rest back. But only if they actually file that personal return.

September 15 is also the due date for the third estimated income tax payment for 2026. In America, income tax isn't due only after the year ends but as you go, through payroll withholding or, if you have none, through four estimated payments. According to the IRS, they are due on April 15, June 15, September 15 and January 15 of the following year.

If you receive profits as a partner in an American company and not enough is already being paid in through the company, have someone check whether an estimated payment is due. Underpay, and you'll owe interest on the difference, currently seven percent a year for this quarter.

The books aren't done. The classic. Receipts are scattered across three inboxes, bank transactions aren't categorized, the shop's register reports are missing. You can't build a partnership return from a bank statement. It needs a balance sheet and a profit calculation under US rules.

Someone is waiting on someone else. The partners wait for the accountant, the accountant waits for the partners, and both wait for the other to get in touch. In June that sounds harmless. In September it's a penalty.

Nobody knew it was a partnership. See above. If you think your LLC is invisible for tax purposes, you won't file at all, and you'll only learn about the mistake when the notice arrives.

Filing a return with estimated numbers to meet the deadline and correcting it later is not a good idea. A partnership return must be complete and accurate, and an incorrect K-1 triggers the second penalty. Doing nothing and hoping for leniency doesn't work either. The IRS assesses the penalty automatically. You can request relief for reasonable cause, but you need a reason that holds up.

Seven days are enough for a well-prepared return. They're not enough for bookkeeping that starts from zero. So the first question has to be honest: where do the numbers stand?

If the year-end financials are ready, the return can be done in a few days. If not, the priority is keeping the penalty as small as possible. Every partial month counts in full. A return that arrives on September 30 costs the same one month as one arriving on September 16, but far less than one filed in January.

Either way: gather your documents, the full year's bank statements, invoices, payroll records, and records of partner contributions and withdrawals. Then hire someone who isn't doing these returns for the first time.

For an American couple with a small LLC, a late partnership return is a nuisance. For partners from Europe, it can become an obstacle, in places you wouldn't expect.

If you want to renew an E-2 visa, the company's tax returns go into your file. If you apply for a mortgage on a home in Texas, you'll be asked for the last two years of returns. Same if you want a bank to expand your business account. A missing or late return tells a story in all these places, and it's not the one you want to tell.

An American company isn't expensive to run. It gets expensive when you don't know its calendar. In January, the reports on payments to contractors, which we covered in Your LLC has three deadlines in January. In March, the partnership return or its extension. In April, the personal return, more on that in Tomorrow is Tax Day. In September, the extended partnership deadline. In October, the extended personal deadline. In between, the state filings and, depending on your accounts, the foreign account report we wrote about in Two forms nobody knows.

Set this calendar up properly once and you'll have peace of mind. Rediscover it every year and you'll pay for it every year.

That's why, before a company is even formed, it pays to ask which entity type and tax treatment suit the owners. A couple from Graz with a roastery in Austin has different needs than a software company with investors. Our written tax plan answers exactly that question before the first return is due. And if you haven't formed your company yet, you'll find the basics under Texas LLC.

This weekend, Lena and Matthias pulled together their receipts from three cardboard boxes and two email inboxes. It wasn't pretty, and it wasn't quick. But in the end there was a folder on the table that someone can work with.

That's the real work behind a deadline: not the return, but the courage to open the box.

If your LLC has more than one member and the 2025 return hasn't been filed yet, our team in Austin will take care of the year-end accounts and return for your partnership, including the K-1 for every member. For the personal side, there's the US tax return. Everything on taxes for businesses and individuals is in our US taxes hub, and all services with fees are under Services & Fees.

Seven days. That's not a lot. But it's enough if you start today, not on Monday.

Consultation & implementation

If you'd like to find out what this means for your own situation, the best step is to book a consultation.