K- 1

What is a Schedule K-1 tax form?

Schedule K-1 is used to report income, losses, dividends, and other tax information for pass-through entities like business partnerships, S corporations, and trusts. If it applies to you, you'll get a K-1 showing your share of the business’s income for your personal tax return.

 Schedule K-1 helps the Internal Revenue Service (IRS) track who earned what, even if that person didn’t receive money directly. It shows things like rental income, capital gains, business profit and loss, and other financial details.

 K-1 forms are used by pass-through entities, which are businesses where the income “passes through” to individuals rather than being taxed at the corporate level. Here’s how it works for these entities:

• General partnership income is split based on the agreement
• Limited partnership income is based on each partner’s share
• S corporation profits go to shareholders based on stock ownership
• Trusts and estates report income to beneficiaries

 With pass-through entities, profits or losses go to the following individual members, who then need to pay taxes:

• Business owners and co-owners
• Partners in business partnerships
• Shareholders and investors
• Trust and estate beneficiaries

You may not actually file a K-1 form yourself—the business or trust will prepare it and send it to you so you have the information you need to pay taxes. The business also files a copy with the IRS, and they’ll check that your numbers match theirs.

FAQs

Who needs to fill out a K-1 form?

Partners and shareholders of pass-through entities as well as trust and estate beneficiaries need to know about Schedule K-1. However, you don’t fill out a K-1 yourself—the business or trust you're involved with prepares it for you. You’ll just receive the form so you can report the income on your annual tax return.

What’s the difference between a 1099 and a K-1?

A 1099 form is used for reporting income from sources like freelance work or interest, while a K-1 reports income from a pass-through business or trust. They both go on your personal tax return, but come from different types of taxable income.

How does a K-1 affect my personal taxes?

The K-1 shows your share of the business or trust's capital gains, profits, losses, or credits, which you’ll report on your personal income tax return. Even if you didn’t actually get the money, you may still have tax liability. You’ll also still have to pay self-employment tax, if it applies to you.

What if I get a K-1 after filing taxes?

If you get a K-1 after you’ve already filed taxes, you’ll need to file an amended return to report that taxable income. The IRS compares your return to the one submitted by the business to make sure you pay all your income tax, so it’s important they match.