Form 8865 Tax Year Confusion - Beginning/Ending Dates for Foreign Partnership Accounting Period
I'm pulling my hair out trying to figure out Form 8865 (Return of U.S. Persons With Respect to Certain Foreign Partnerships). The instructions and the actual form seem to contradict each other about what accounting period to use. In my situation, I have a foreign partnership with a fiscal year that runs May-to-May. The instructions on page 5 state: "Category 1 or 2 filers must report information for the tax year of the foreign partnership that ends with or within their tax years." So for my 2025 tax return, I should be reporting on the partnership's tax year that ended in 2025 (May 2024 to May 2025), right? But here's where I'm confused - when I look at the actual Form 8865, the "beginning" year is pre-printed as 2025. This makes it seem like they want me to enter May 2025 to May 2026, which is impossible because that period hasn't finished when I'm filing my 2025 return! What if someone had a different fiscal year like December-to-December? They'd be in the same boat trying to report on a period that hasn't ended yet. I called the IRS and they refused to answer questions about this form, saying it's "outside their service scope." Seriously? A form they require me to file is outside their scope?? While I'm at it - another question about the same form: For reporting rental income from the partnership using Form 8825, should I report my distributive share only or the partnership's total income? Form 8865 Schedule K line 2 references Form 8825, and Schedule K is about distributive shares, but the 8825 instructions don't specify whether it's my share or the whole partnership's income. Thanks for any help!
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Aiden O'Connor
I've been filing Form 8865 for several years now, so I can help clarify. The confusion is understandable! For the tax year issue: You're correct in your understanding. When filing your 2025 return, you should report on the foreign partnership's tax year that ENDS within your 2025 tax year. So for your May-to-May partnership, you'd report on May 2024 to May 2025 since that period ends within your 2025 calendar year. The pre-printed "2025" on the form is referring to YOUR tax year, not the partnership's beginning year. You'll need to manually enter the actual date range of the partnership's fiscal year (05/01/2024 to 04/30/2025) in the spaces provided. Don't let the pre-printed year confuse you. As for the Form 8825 question: You need to report the ENTIRE partnership's rental income on Form 8825, not just your distributive share. This form shows the full partnership activity. Your actual distributive share will be calculated and flow through to your personal return based on your ownership percentage.
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Zoe Papadopoulos
•But if the pre-printed year refers to MY tax year, why would they put it next to "beginning" on the form? I can't find any clear instructions about what dates to enter in those specific fields. Also, do you know why the IRS refuses to answer questions about this form?
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Aiden O'Connor
•The pre-printed year is confusing, I agree. It's positioned poorly on the form. But if you look at the complete header, it's meant to identify which tax year YOU are filing this form for, not the beginning date of the partnership's fiscal year. When you fill out the actual beginning/ending dates, you'll use the partnership's fiscal year dates that end within your tax year. The IRS likely refuses to answer questions because Form 8865 falls under international taxation, which is considered a specialized area. Many frontline IRS representatives aren't trained on these complex international forms. Your best bet is to consult with a CPA who specializes in international taxation or try calling the IRS International Tax Office directly instead of the general helpline.
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Jamal Brown
I went through this exact same nightmare last year with my Form 8865 filing. After countless hours researching, I found taxr.ai (https://taxr.ai) which saved me so much stress. They have a document analyzer that specifically handles foreign partnership returns and clarified all my confusion about fiscal years on Form 8865. I uploaded my partnership documents and Form 8865, and their system immediately flagged the date inconsistency and explained exactly what dates to use. It confirmed I needed to use the partnership tax year that ended within my personal tax year, not the upcoming one. For your May-to-May situation, you'd definitely use May 2024-May 2025 for your 2025 filing.
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Fatima Al-Rashid
•How accurate is this service with international tax forms? My partnership is in Singapore with a March-to-March fiscal year and I've been getting conflicting advice from two different accountants about Form 8865.
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Giovanni Rossi
•Sounds interesting but I'm skeptical about automated tax advice. Does it actually help with the second question about Form 8825 and whether to report total partnership income or just the distributive share? That's the part my accountant always gets confused about.
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Jamal Brown
•It's extremely accurate with international forms - they specialize in cross-border situations. For Singapore partnerships specifically, the system understands the March-to-March fiscal year and will correctly identify which period to report on Form 8865. The service has tax professionals who review edge cases, so you're not just getting automated advice. Regarding Form 8825, yes, it absolutely clarifies this common confusion. It specifically explains that you report the total partnership rental income on Form 8825, not just your distributive share. The system walks through how Form 8825 connects to Schedule K, and how your percentage then flows to your personal return. This was actually the most helpful part for me since my accountant was making the same mistake.
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Giovanni Rossi
I was genuinely skeptical about taxr.ai but decided to try it anyway due to my ongoing Form 8865 headache. I'm honestly shocked at how helpful it was! I uploaded my foreign partnership documents and it immediately identified that for my UK partnership (with a September fiscal year) I needed to report Sept 2023-Sept 2024 on my 2025 return. What impressed me most was the explanation about Form 8825. It confirmed that the ENTIRE partnership rental income goes on this form, not just my distributive share. This was exactly what I needed since my accountant had been reporting only my percentage, which was incorrect. The system even flagged potential audit triggers related to currency translation that I hadn't considered. Worth every penny for the peace of mind. Wish I'd found it years ago!
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Aaliyah Jackson
I had the exact same issue with Form 8865 last year. Called the IRS multiple times and got nowhere! After spending weeks trying to figure it out, I finally discovered Claimyr (https://claimyr.com) which got me through to an actual IRS agent who specializes in international forms. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS specialist confirmed that for your May-to-May partnership, you absolutely report on the fiscal year that ENDED in your tax year (so May 2024-May 2025 for your 2025 filing). The agent explained that the pre-printed year on the form is poorly designed and causes confusion for everyone. They also clarified the Form 8825 question - you report the ENTIRE partnership's rental income, not just your share. Your actual distributive amount is calculated elsewhere on the return.
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KylieRose
•Wait, how does Claimyr actually work? I thought it was impossible to get through to the IRS international tax department - I've been trying for months. Do they really connect you with specialists who understand Form 8865?
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Miguel Hernández
•This sounds too good to be true. I've waited on hold with the IRS for 3+ hours multiple times trying to get help with foreign partnership forms. You're telling me this service somehow jumps the queue? How much does it cost? And are you sure the person you spoke with actually gave correct information?
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Aaliyah Jackson
•Claimyr works by using technology to navigate the IRS phone system and wait on hold for you. When they reach an actual agent, you get a call to connect with them. For international tax questions, I requested to speak with someone in the international division, and after a brief hold, they transferred me to a specialist who definitely knew Form 8865. I understand the skepticism because I felt the same way! The service doesn't "jump the queue" - they just wait in it for you. The information I received matched what my CPA later confirmed about the foreign partnership fiscal year issue. The agent walked me through exactly which boxes to fill in on the form and explained the reasoning behind reporting the full partnership income on Form 8825, not just my share.
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Miguel Hernández
I have to apologize for my skepticism about Claimyr in my previous comment. After continuing to get nowhere with the IRS directly, I broke down and tried it. I'm still in shock that it actually worked! After Claimyr connected me with an IRS agent, I asked to be transferred to someone familiar with international forms. I was connected to an extremely helpful specialist who walked me through the entire Form 8865 process. She confirmed everything mentioned here - for a May-to-May partnership fiscal year, you report May 2024-May 2025 on your 2025 return. The specialist also explained why the form is confusing: the pre-printed year refers to YOUR tax year, not the start of the partnership's fiscal year. She even emailed me detailed instructions for completing the form properly, including confirmation that Form 8825 should show the ENTIRE partnership's rental income. I wasted so many hours trying to figure this out on my own. Should have tried this service months ago!
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Sasha Ivanov
Just wanted to add another perspective here. I've been filing Form 8865 for my Australian partnership (July-June fiscal year) for years and always report the partnership's fiscal year that ENDS within my tax year. So for my 2025 filing, I report on July 2024-June 2025. One thing nobody mentioned yet - be super careful with currency translation! You need to translate AUD/GBP/whatever to USD using the appropriate method for each type of transaction. For balance sheet items, use year-end exchange rates. For income items, you can use annual average rates. The IRS is getting much stricter about this in recent years. Also, double-check if you need to file FinCEN Form 114 (FBAR) in addition to Form 8865 if you have signature authority over foreign accounts. The penalties for missing these international forms can be brutal!
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Sofía Rodríguez
•Thanks for the additional info! For currency translation, I was planning to use the annual average rate for everything. Are you saying I need to use different rates for different parts of the form? Where do you find the official rates to use?
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Sasha Ivanov
•You definitely need to use different rates for different items! For income and expense items (including rental income on Form 8825), use the annual average exchange rate for the partnership's fiscal year. For balance sheet items and capital accounts, use the exchange rate on the last day of the partnership's fiscal year. The IRS doesn't specify an "official" source for exchange rates, but I typically use the rates published by the U.S. Treasury Department (fiscal.treasury.gov) or the Federal Reserve. Make sure to document your source and be consistent year to year. Also, regarding your other question - yes, you must file FBAR (FinCEN 114) separately if you have signature authority over foreign accounts exceeding $10,000 at any point during the year. This is separate from Form 8865 and has its own brutal penalties if missed.
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Liam Murphy
Has anyone actually heard of the IRS penalizing someone for filing Form 8865 with incorrect dates? I'm in a similar situation with a UK partnership (April-March fiscal year) and have been reporting the fiscal year that STARTS in my tax year rather than ENDS. Now I'm worried I've been doing it wrong for 3 years! Do I need to file amended returns? Or just fix it going forward? The difference is substantial because we had a major property sale in April 2023 that I reported on my 2023 taxes, but now I'm thinking it should have been on my 2024 return instead!
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Amara Okafor
•You should definitely file amended returns. The IRS is increasingly focused on international reporting, and Form 8865 errors can trigger penalties of $10,000+ per form. I'd recommend working with a tax professional who specializes in international taxation to get your prior years corrected. The property sale being reported in the wrong year is particularly concerning since that's a significant event that could draw attention. Better to fix it voluntarily before they come knocking!
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Liam Murphy
•Thanks for the reality check. I didn't realize the penalties could be that severe! I'll look into finding a specialist to help with the amended returns. This whole form is so needlessly complicated compared to domestic partnership reporting.
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Sofia Ramirez
I feel your frustration with Form 8865 - it's one of the most confusing forms the IRS has ever created! I've been dealing with this exact issue for my Canadian partnership (January-December fiscal year) and can confirm what others have said. For your May-to-May partnership, you're absolutely correct to report the fiscal year that ENDS within your 2025 tax year (May 2024 to May 2025). The pre-printed "2025" on the form is indeed referring to YOUR tax year, not the partnership's beginning date. It's terrible form design that confuses everyone. Regarding the IRS refusing to answer questions - this is unfortunately common with international forms. They consider Form 8865 "specialty" and most phone representatives aren't trained on it. I've had success calling early in the morning (8 AM EST) and specifically asking to be transferred to the International Tax division, though it can take multiple attempts. One additional tip: make sure you're also checking if you need to file Form 8865 for multiple categories. Some people need to file as both Category 1 (10% owner) AND Category 2 (ownership change) in the same year, which requires separate forms with different reporting periods. The instructions don't make this clear at all. The Form 8825 question has been answered correctly by others - report the ENTIRE partnership's rental income, not just your distributive share. Your actual share flows through elsewhere on your return.
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Aisha Rahman
•Thank you for the comprehensive explanation! The multiple category filing requirement is something I hadn't even considered - that's terrifying to think I might need separate forms. How do you determine if you fall into multiple categories? And do you have any tips for actually getting through to the International Tax division? I've tried calling several times but keep getting transferred around in circles. Also, has anyone found a reliable way to double-check if you're completing Form 8865 correctly before filing? I'm paranoid about making mistakes given all the penalty warnings in this thread!
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