165: Arizona Partnership Income Tax Return (2024)
Arizona · Arizona DOR · Used for tax years 2024
Arizona Form 165 is the 2024 Arizona Partnership Income Tax Return. It reports partnership income and adjustments from federal to Arizona basis. It also calculates entity-level tax for partnerships that made the Pass-Through Entity (PTE) election.
What you'll need
Have these records and details available to complete the return:
- Federal Form 1065, including Schedule K: Form 165 uses federal ordinary business and rental income or loss and the federal business activity code.
- Income adjustment records: Gather the amounts for applicable Arizona additions and subtractions, including federal and recalculated Arizona depreciation.
- Partner information: Schedule D asks for each partner’s name, address, tax identification number, partner classification, distributive share, and share of income. Include additional schedules if there are more than 10 partners.
- PTE payment records, if applicable: The form asks for estimated tax payments, extension payments, and relevant payments and overpayments from earlier versions of an amended return.
- Multistate business records, if applicable: Schedule C asks for Arizona and total-everywhere amounts for the applicable apportionment factors. Qualifying air carriers must use Schedule ACA. Qualifying multistate service providers must include Schedule MSP.
If you report IRS adjustments that have not previously been reported to the department in Question J, submit a copy of the IRS reports.
How to file
Form 165 must be e-filed unless the partnership has a waiver or is exempt from e-filing. The form refers to the instructions for details, but no instructions were provided here.
Select whether the return is original or amended, and identify the calendar or fiscal tax year. A partner must sign and date the declaration and provide their printed name and title.
Complete Part 2 only if the partnership answered “Yes” to Question A about electing to pay tax at the entity level.
The supplied form does not provide a mailing address or paper-filing directions for partnerships with a waiver or exemption.
Common mistakes
- Part-year resident income totals do not match: Lines 16A and 16B must add up to line 16.
- Partner income allocations do not match the total: Lines 12, 14, 16, and 18 must add up to line 10.
- Ownership shares do not total correctly: Schedule E, line E8, column (c), should equal 1.000000.
- Required multistate schedules are missing: Qualifying air carriers must use Schedule ACA, and qualifying multistate service providers must include Schedule MSP.
- Too much of Schedule C is completed for sales-factor-only apportionment: If the “SALES FACTOR ONLY” box is checked, complete only Section C3, lines a through f, and skip C4 and C5.
Questions people ask
When should the partnership complete Part 2?
Complete Part 2 only if the partnership answered “Yes” to Question A, indicating that it made the PTE election to pay tax on its flow-through income at the entity level.
What PTE tax rate is printed on the 2024 form?
Part 2 uses a rate of 2.5% (0.0250) on lines 20 and 24.
Does Schedule D need to list every partner?
Yes. Complete Schedule D for all partners. If the partnership has more than 10 partners, include additional schedules as necessary.
Can an overpayment be applied to next year’s estimated tax?
Yes. Line 39 lets the partnership apply an amount from line 38 to 2025 estimated tax. Line 40 shows the amount to be refunded after subtracting line 39 from line 38.
Which form reports a federal imputed underpayment assessment?
For taxable years 2016 through 2024, the form says to file Arizona Form 165PA if the partnership received a federal imputed underpayment assessment or filed an Administrative Adjustment Request that resulted in one.