Do I have to report my foreign partnership to the IRS?

Yes. If you are a U.S. person with an ownership interest in a foreign partnership, you generally file Form 8865 along with your Form 1040. Whether you file as a Category 1, 2, 3, or 4 filer depends on your ownership percentage, control of the partnership, and whether you contributed property or triggered an acquisition event.

You report your distributive share of partnership income, deductions, and credits on Schedule E and carry those numbers to Form 1040. A foreign partnership is any entity classified as a partnership under U.S. tax rules (multi-member LLC or foreign equivalent) that is organized outside the United States.

Common filing triggers:

• Controlling interest (>50%) in a foreign partnership = Category 1 filer
• 10% or greater interest when U.S. persons collectively control the partnership = Category 2
• Property contributions of $100,000+ during the year = Category 3
• Reportable acquisition or disposition crossing the 10% threshold = Category 4

Related filings that often accompany Form 8865:

• Form 8938 (FATCA) if total foreign financial assets exceed the threshold
• FinCEN Form 114 (FBAR) if the partnership has foreign bank accounts where you have signature authority
• Form 1116 if foreign tax is paid at the partnership level

Penalties for failing to file Form 8865 start at $10,000 per partnership per year and increase to $60,000 after IRS notice.

For complete filing guidance, see our Form 8865 reporting guide.