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The Schedule K-1 Tax Form
The Schedule K-1 Tax Form
If you’re involved in a partnership, own shares in an S Corporation, or are part of an estate or trust, you’ve probably heard of Schedule K-1. But what exactly is it? Basically, Schedule K-1 is a tax form used to report your share of income, deductions and credits from these types of entities.
Understanding how Schedule K-1 works can help you stay on top of your business taxes. We'll break it down to make the process a bit easier, covering what is a K-1, types of K-1 forms and Schedule K-1 instructions.
Key takeaways:
- Schedule K-1 forms report your share of income, deductions, and credits from your business or estate.
- There are specific K-1 tax forms for partnerships, S Corporations and trusts.
- You don’t need to send the K-1 form to the IRS; just include the information on your tax return.
Table of contents
What is a K-1 form?
A K-1 tax form is something you’ll get if you’re involved in a partnership, an S Corporation, or a trust. It’s not like the usual W-2 you might get from a job—it’s a bit more personalized. The K-1 tax form shows your specific share of the income, deductions and credits from the business or trust, and you’ll need to include this information when you file your personal taxes.
So, what is a K-1 tax form, exactly? Let’s say you’re a partner in a small business. The business itself doesn’t pay taxes on its earnings. Instead, the income “passes through” to you and the other partners.
When tax time rolls around, you’ll get a K-1 form that tells you how much of the profits (or losses) you need to report on your tax return. It’s not just about the income—the K-1 form also includes details like your share of business expenses or tax credits, which can affect what you owe.
There are four main types of entities that must file a K-1: business partnerships, LLCs with at least two partners or those that choose to be taxed as corporations, S Corps and trusts or estates.
Each of these entities completes a different version of the K-1 form. Though these forms are generally similar, they have slight variations depending on the entity filing them. K-1 forms are typically sent to three main groups of people: business owners, co-owners, and partners; shareholders and investors; and individuals receiving income or assets from a trust or estate.
Types of K-1 forms
When we talk about what is a K-1 tax form, we're referring to a document used to report various types of income from partnerships, S Corporations and trusts or estates.
First, let’s look at Form 1065 Schedule K-1. This K-1 tax form is used by partnerships, and multi-member LLCs. It reports each partner's share of the partnership’s K-1 income, along with other financial details. If you’re a partner, this K-1 form tells you what part of the business's income or loss you need to include on your personal tax return.
Next is Form 1120-S Schedule K-1. This K-1 form is specific to the S Corps. If you’re a shareholder in an S Corp, you’ll receive this K-1 tax form, which outlines your share of the corporation’s K-1 income, losses, deductions and credits. S Corps don’t pay taxes at the corporate level, so this form is essential for reporting your share of the income on your personal return.
Lastly, there’s Form 1041 Schedule K-1, used by estates and trusts. This K-1 tax form reports the K-1 income, deductions and credits that beneficiaries need to include on their individual tax returns. If you’re a beneficiary, this K-1 form will detail your portion of the estate or trust earnings that you must report.
When do corporate K-1 forms come out?
Corporate K-1 forms, like the Schedule K-1 (Form 1120-S) for S Corps, are usually issued after the company’s tax return is filed. For S Corps, the tax return is due on March 15th. This means you can typically expect to receive your K-1 tax form after this date. However, if the company files for an extension, moving the deadline to September 15th, your K-1 tax form might come later.
Shareholders generally receive their K-1 forms in the spring, between March and April. But if there are delays or if the company’s finances are complicated, it might arrive a bit later. Your K-1 tax form details your K-1 income, including your share of the company’s earnings. Always wait for this form before filing your personal tax return, as it contains important information needed to accurately report your K-1 income. You can find all the K-1 forms on the IRS website.
Schedule K-1 instructions
Each K-1 form can be a little different depending on the type of entity you're filing for. For Schedule K-1 (Form 1065), there are three parts: Information about the Partnership, Information about the Partner and Partner’s Share of Current Year Income, Deductions, Credits, and Other Items. Part III is where you'll report your K-1 income. This K-1 form doesn't have to be filed by the partners, but it is used to file personal returns that are due on April 15th.
The Schedule K-1 instructions for the Form 1120-S K-1 form are similar to the partnership tax form. It also has three parts: Information About the Corporation, Information About the Shareholder and Shareholder’s Share of Current Year Income, Deductions, Credits, and Other Items.
You don’t need to send the physical K-1 form to the IRS yourself because they get a copy with the business’s tax return. However, make sure to include the information from your K-1 on your own tax return, as the IRS will be expecting it.
The K-1 for estates has three parts: Information About the Estate or Trust, Information About the Beneficiary, Beneficiary’s Share of Current Year Income, Deductions, Credits, and Other Items. Each beneficiary gets a copy of this tax form to use for their personal taxes.
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