I Received a K-1. What Is It?

It’s mid-March. Nearly two months ago, you received your W-2. A short while later, the last of your 1099-INTs from your bank arrived.  Just when you thought you had all of your tax documents, you surprisingly received a corrected 1099-DIV. If you weren’t such a procrastinator, you would have filed your tax return a few weeks ago.  Good thing you hadn’t!

K-1

K-1

But the strangest thing happened today – you opened the mail and there, with your name on it, is a tax form you’ve never seen: Form K-1. You weren’t expecting it, you never received one before, and you just got it, only a month before the tax deadline.

You: What gives?

A K-1 is a tax form distributed by many partnerships, S-Corps, estates, and trusts.  If you are a general or limited partner of a partnership, a shareholder in an S-Corp, or the beneficiary of an estate or trust, you’re likely to receive a K-1.

You: But what is it?

A K-1 is just like a W-2 or other tax form.  You use the information provided on the form to accurately complete your tax return.  Except as illustrated in the opening scenario, K-1s are often distributed much later in the year than other tax forms.

You: Why do they arrive so late?

In order for the entity to send you the K-1, it first needs to complete its own tax return.

You: Huh?

For example, a partnership must prepare its taxes- its partnership tax return – before it sends out the K-1s to the partners.   The due date for most partnership tax returns is March 15. Consequently, K-1s are often received much later than other tax forms. Furthermore, like individuals, partnerships can request extensions of time to file, often until September 15.

You: So I might not receive a K-1 until after April 17, the deadline for my tax return?

Indeed, it’s not only possible, it happens routinely.

You: So how do I plan for that?

Most people who receive K-1s know they will receive them.

You: How do they know?

It’s rare to own a partnership or be a trust fund kid and not know it.

You: I suppose you’re right. So if get one of these K-1s, what would I do next?

Once you’re ready to start your tax return, collect all your tax forms, including any K-1s. If you’re using tax software, the program will tell you what you need to do with each form. TurboTax easily guides you through entering items reported on your K-1 and puts the information on your proper tax forms.

So, don’t lose too much sleep; the K-1 is, ultimately, just another form used to complete your taxes and report your income to the IRS.

Michael Rubin

Author of the bestseller Beyond Paycheck to Paycheck, and the upcoming The Savings Solution, Michael B. Rubin is a Certified Public Accountant (CPA) and a CERTIFIED FINANCIAL PLANNER professional. In addition to his experience providing sophisticated financial advice to affluent clients, Michael has been a key source of information for over a decade to countless others. He speaks passionately about and provides guidance on virtually all personal financial planning topics. Michael has appeared in various media, including radio and TV stations across the country, plus national media such as CNN Money.com, latimes.com, The Wall Street Journal, SmartMoney.com, Chicago Tribune, Financial Advisor Magazine, and Investment News. Prior to founding Total Candor LLC, Michael worked in the personal financial services practices of two of the former "Big Six" accounting firms. Subsequently working for several years as a new venture executive for Toys "R" Us, Inc., he made sure that he never actually grew up. He holds an undergraduate business degree from the Ross School of Business at the University of Michigan and an MBA from the Kellogg School of Management at Northwestern University. Michael lives in New Hampshire with his wife and children.

Comments (86) Leave your comment

  1. I received another K-1 in the mail today.. so I just filed for an extension. Can I purchase/use Turbo Tax 2013 after the filing deadline ?

  2. Turbo Tax tells me that I have to file a second K-1 because Part III Box 16 has numbers in both F, C and D. How do I separate these into two K-1’s

  3. I have Turbo Tax Deluxe and it asks me many questions about my K-1 but I can not say it is “easily guiding” me through. I am very comfortable with the rest of my tax return but I don’t know what to do with these! (All from short-term investments).

  4. So is a K-1 the money you’ll receive this year, or is just reporting your share of profits from the business entity? It looks like it’s being treated as a realized income, so the amount in box 1 should be what you receive this tax year right? I assume you won’t have to pay anymore taxes on it since it’s already been included as income this year right?

  5. I received a K-1 that says under final year deductions $2468.00. There was no interest income. Is this an amount we owe??

  6. I’m looking at taking a job, that instead of paying wages, will pay me a percentage of the net profits. I will be established as a “1% revocable partner” and receive a K-1. Expected gross income from this position will be approx. $50,000. Will I wind up paying more or less taxes?

    • the same. It just comes to you on a K-1 instead of a W-2 or a 1099. Depending on the type of LLC you could actually get a positive net benefit depending on the expenses and whether you are considered a partner.

  7. I sold all stocks like, KKR and BX which had K-1″s in my IRA’s due to no way to handle them automatically in Turbo Tax. This year I noticed a question was asked ” was this K-1 in an IRA?” Since I had none this year I didn’t check that box but does that indicate that Turbo Tax can now effectively handle a K-1 in an IRA?

  8. Getting my 2012 taxes done today but still haven’t received a k-1. should I wait for it, file for an extension or estimate or do an amended filing later? Don’t these partnerships have to get us these k-1’s before April 15th?
    Thank you for your help
    Sm

  9. My Grandmother past away in 2004 and in her will she left a trust to the 3 grandchildren, me included. The will stated that we were not to receive our third until we turned 30. I turned 30 March of 2012 and the following January (01-2013) I received paperwork from the trust holders to initiate the transfer of my share. I’ve received the check and deposited it into my savings account for the time being. My wife and I would like to pay off some student loans with a portion of it but I’m not sure how much to save back for the following tax year. Is there a ballpark figure on what to hold out? Are we talking 15% of earnings or 15% of the entire disbursement? Any help would be appreciated. Thanks,

  10. Hi! I received a K-1 with Code C for “other distribution” on line-19. This is from a firm which invests in shares from secondary-market (pre-IPO) and when the shares went IPO, the purchase amount is set to distribution amount on K-1.
    I have already filed my tax-return with the K-1 but without the distribution amount. The distribution amount does not seem taxable since the sales of the shares was accounted on Schedule-D.
    I ran turbo-tax with amendment and the net change in Federal and California taxes seems zero.
    I want to confirm that I do not need to file an amendment due to this distribution on K-1.
    Thank you.

  11. I received a Schedule CT K-1 which includes a tax liability amount in Part III, line 1. However, when I use the non-resident CT return in TurboTax, after entering my ordinary income from the CT K-1, a different tax liability is calculated. Additionally, there does not appear to be a CT K-1 form in TurboTax. How do I include the information from Part III, line 1 in my CT return?

  12. TT instructions indicate that info in boxes 13, 16 and 20 must be manually entered. Box 13 has T numbers from T1 to T8, box 16 has a series E, J, M, A. Box 20 has Y1 to Y4. Where do tey all go.

  13. My mom passed away in 2009. Everything was in trust. Just recently, we finally sold the house. the trust has been dissolved. I never received a K-1 before. Last week I received a K-1 for 2009 listing interest income, etc. with no explanation of what the interest was for. I was not the trustee, just a beneficiary. How do I file this form? Do I file it with my current year taxes or do I need to amend my 2009 return?

    • Hi Donna,
      Sorry about your loss. The K-1 should have dates that it’s related to like 2009 or 2009-2010. You would file it in the year that it’s related to. So if it says 2009 you would need to amend your tax return for 2009.
      Thank you,
      Lisa Greene-Lewis

      • Lisa, I have a W2 and a K1 from a S corp in 2013 what Turbo Tax software should I use?

  14. What do I do if I filed my K1 and it keeps asking for trust and estate tax numbers and beneficiaries. I don’t have a trust or beneficiaries??

  15. We live in Maine and received a K-1 for income from a limited partnership in Wisconsin. Are we required to also file a Wisconsin state return in addition to our Maine state return? Or can we claim that income on our Maine state return. It looks like Turbo tax is telling me I do have to file a Wisconsin return. But it also looks like Maine is claiming taxes for that as well.

  16. My 2011 Schedule K-1 (Form 1065) zeroed out my capital account and I am unsure if I need one for the 2012 return. If the partnership id defunct do I need a K-1 for 2012?

  17. I received a k-1 from my father’s estate. I went through the questions in TT. Box 11 had A, C, D and the amounts. While TT reviewed, it was flagged for a detailed explanation on line 21 of my 1040, concerning box 11 D ~ $205.00. I have no idea what to put as an explanation. I don’t know where else to look for help. Thanks.

  18. I received a 2011 K-1 in late March 2012 as a beneficiary of an estate. The K-1 listed the full amount I received from the estate even though I received only 55% of the money in calendar year 2011. The other 45% I received at the same time as the K-1 (March 2012). Do I have to report the money I received in March 2012 on my 2011 tax return?

    • Hi Mike,
      Since K-1 for the estate ended on March 2012 and income from the estate is reported to you in 2012, you need to report it on your 2012 tax return.

      Thank you,
      Lisa Greene-Lewis

  19. I received a K-1 as I have for years and filed them as they were presented to me. Now the accounting firm that issued them is saying they made a mistake for the last 4 years and I received more deductions than I should have & that it is my fault for filing the K-1! That they want to file an amended return for the last four years all at once to fix the accounting mistake. Isn’t this a mistake they should be liable for?

    They are claiming that the K-1 is for “informational purposes only”.

    Any thoughts here?

    • Hi B,
      K-1s are used to pass through amounts to individual parties who have interest in the entity. I’m not sure what type of K-1 you have (trust,estate,partnership), but you are supposed to report income and deductions from those entities on your personal tax return.
      Thank you,
      Lisa Greene-Lewis

  20. I received a K-1 (Schedule 1041) for a Survivor’s Trust for calendar year 2011, and am amending my 2011 return (already submitted & rec’d). At the step where TT asks if this is the final K-1 expected to be rec’d, there is a note to answer “yes” if there is an amount in box 11. There is no amount in this box (Final year deductions); does that mean I should answer “no”? Thank you.

    • Hi Brian,
      Your K-1 should indicate if it is a final K-1 by a check mark. If it is not indicated that it is final and there are no amounts in box 11 then answer “no”. You can also check with the trust administrator to make sure.
      Thank you,
      Lisa Greene-Lewis

  21. TurboTax Premier asks if I received a K-1. I have, but the company involved is not recognized as an “S” corp in one of the states I file in. For that state return, do I answer “yes” or “no”?

    • Hi Phil,
      You should still answer yes. When you put the state information in the program it should prompt you and make the correct entries for you based on the state information you enter.
      Thank you,
      Lisa Greene-Lewis

  22. We received a K-1 after filing and receiving our refund. It lists a distribution in box 19 (A), but we sold our shares in 2009, and had no money coming in or going out in 2010. Do I need to amend my return? Thanks.

    • Hi Nancy,
      You would need to amend your tax return since the K-1 information was reported to the IRS, however if you think this was reported in error do not amend your tax return, you need to contact the business that issued the K-1 and have them correct the information reported to the IRS.
      Thank you,
      Lisa Greene-Lewis

  23. Is this true?? I called the IRS. The rep said I do NOT need to report this unless the Partner’s ID number in Part II Box E on the K-1 form is my ID (my Social security). Turns out the ID number on the forms I got was the ID of my ROTH IRA, which she said is not a taxable entity, therefore I can ignore these forms–they’re just for my records. I asked if it matters whether Box 20 V exceeded $1000–maybe sometime in the future when the proceeds accumulate–and she reiterated: If Box E has the Roth’s ID number it doesn’t matter how much is in Box 20 V, because a Roth is a non-taxable entity

    • Hi,
      Yes, if the K-1 does not have your social security number and the ID of your Roth then it was sent to you for informational purposes.
      Thank you,
      Lisa Greene-Lewis

  24. Hi I have K1 from the stock i owned , i sold the stock last year and the K1 says its final where do i enter that info that this is a final K1

    • Hi,
      1. Go to the Federal Taxes tab
      2. Click “Wages and Income”
      3. Click “Explore on My Own”
      4. On the “Your 2011 Income Summary” screen, scroll down to K-1s under Business Items.
      You will have the option to enter this information on the “Describe this Partnership” screen.
      Thank you,
      Lisa Greene-Lewis

  25. Hi,

    I am filing my personal tax form 1040. I have to enter K-1 that I received from company. I am not able to find out how/where to enter using turbo tax. I know how to enter 1099-INT, 1099-DIV, Schedule D but not schedule-K. Any help would be appreciated. Also there are Part I , Part II and Part III mentioned in the schedule -K (Form 1065). Do I have to enter all three parts ?

    • Hi Bart,
      In Deluxe or Premier:
      1. Go to the Federal Taxes Tab
      2. Click “Wages and Income”
      3. Click “Explore on My Own”
      4. On the “Your 2011 Income Summary” scroll down to K-1s under Business Items.
      5. Click “Start”
      You will be guided through all the entries related to your K-1

      Thank you,
      Lisa Greene-Lewis

  26. Our business is located in MI, we worked in both Ohio and Alabama last year. We received an Alabama K1 and an Ohio IT 1140 / 4708 in addition to our “normal” K1… what are we supposed to do with these additional forms? Do we have to and where are we supposed to report these forms? Michigan and Ohio are reciprocal states. Thanks!

    • Hi Dawn,
      Yes you have to claim both the K-1s and the Ohio IT 1140/4708. You should answer the questions in the Federal interview that ask if you earned income in any other states and it will ask you which states. When you include the states in the federal interview it will prompt you to prepare your tax returns for the other states.
      Also please see our support FAQ on preparing multiple state tax returns
      http://turbotax.intuit.com/support/iq/Multiple-States/How-do-I-File-a-Nonresident-State-Tax-Return-/GEN12109.html
      You also should use Premier for these transactions. If you need additional assistance don’t forget we have tax experts available to help you live via phone or chat. You can contact them through TurboTax online.
      Thank you,
      Lisa Greene-Lewis

  27. Just seeking clarification regarding cb’s post: K-1’s from investments held in IRA’s (or Roth IRA’s) are not to be reported on our form 1040 if the Part II, Box E contains the IRA ID number, not the taxpayer’s ID number (or social security number)? If so, this makes logical sense, as the proceeds in IRA investments are tax-free when held in the IRA.

    • Hi Don,
      That is correct. You would only report unrelated Business Taxable Income from your IRA greater than $1,000, which would be in Section 20 of the K-1 if you had any.
      Thank you,
      Lisa Greene-Lewis

      • Hi,
        I am filing my personal tax form 1040. I have to enter K-1 that I received from company. I am not able to find out how/where to enter using turbo tax. I know how to enter 1099-INT, 1099-DIV, Schedule D but not schedule-K. Any help would be appreciated. Also there are Part I , Part II and Part III mentioned in the schedule -K (Form 1065). Do I have to enter all three parts ?

  28. I had a loss on my K-1. I entered all the information into Turbo, but no loss shows up now under K-1. I was told my loss would postively affect my tax. What gives?

    • Hi Richard,
      If you are eligible for a loss, it will show up on your form 1040, however losses on investments are limited by the amount invested in the partnership, whether you materially participate in the business, whether you are a general partner or limited partner, and your income. Please see IRS info on passive activity loss limitations http://www.irs.gov/pub/irs-pdf/i8582.pdf If this does not help, please contact our free tax experts at 1.800.4.intuit so they can talk to you live.
      Thank you,
      Lisa Greene-Lewis

  29. I started the Home & Business version and realized I could’ve used the Premium(input K-1 from SCorp) …..is there a way to tranfer/convert all my info to Premier and not have to start over?

  30. My K-1 investment went belly up in 2011 and I have a $12,000 loss showing on the K-1 on line 1 and $1,200 loss showing on K-1 line 2. I have no other pasive income. Can I deduct the entire loss on my 2011 tax return or do I have to take the capital loss at $3,000 per year? Thank you

    • Hi,
      Without seeing all of your details, I can tell you that your loss will first be limited by your investment (basis) in the business, it also depends on whether you materially participated in the business, whether you are a general partner or limited partner, and your income. TurboTax will guide you through the correct entries and properly prepare your tax return with the K-1 information you enter. If you need more help contact our free tax experts.
      Thank you,
      Lisa Greene-Lewis

  31. Thank you, cb! As it turns out my ID number in box E is my social security number. Really appreciate the response, though!

    • Hi Chuck,
      Yes you need to input any information from the K-1 you received on your tax return. TurboTax Deluxe and Premier will guide you through K-1 entries and prepare the correct tax return based on your entries.
      Thank you,
      Lisa Greene-Lewis

  32. I received a K-1 form for an ETF which I bought 100 shares in my ROTH IRA. Do I need to report it in TurboxTax? Thanks.

    • Hi Jerry,
      Yes you should still file your K-1 as that information will be reported to the IRS.
      Thank you,
      Lisa Greene-Lewis

  33. I purchased and installed TurboTax Deluxe. I will have 2 K-1’s to enter. Can I do that on Deluxe? Or do I need to upgrade to Premium? I so, can I do that on line without paying full price for both Deluxe and Premium?

    • Hi Scott,
      Yes you can use TurboTax Deluxe if you have K-1s you do not need to upgrade.
      Thank you,
      Lisa Greene-Lewis

  34. I entered my K-1 under Business Income, but it depicts a $0 under business income but instead shows the amount by 1099-DIV? I don’t understand have I done something wrong?

    • Hi Danny,
      If you followed the interview and entered the information per the box numbers on your K-1 you are fine. Box 6a and 6b on your K-1 are related to amounts designated as Ordinary Dividends and Qualifying Dividends.
      Thank you,
      Lisa Greene-Lewis

  35. I received a K1 from a trust in OH with a final year deduction. I figured out the federal part, but do I have to make adjustments on my KS return since the trust was from another state?

    • Hi Amy,
      Yes, you would have to prepare a non-resident tax return if the K-1 is for income received in another state. TurboTax should guide you through the process. You would have to indicate that you received income from another state in the federal interview.
      Thank you,
      Lisa Greene-Lewis

      • If the income on the K-1 from another state is related to an IRA distribution from a 1099-R to the trust, would you need to file a return to the other state. For example, my residence is Colorado and the Trust was located in Utah.

      • Hi Warren,
        You may need to, however if the distribution went to the trust and not to you, you may not need to file it. You have to check and see if the K-1 has your social security number or the IRA account number. If it does not indicate your social security number it was issued for informational purposes.
        Thank you,
        Lisa Greene-Lewis

    • Hi Phillip,
      I think you are asking if you received a K-1 with all numbers as 0 would you need to amend your tax return, right? If so, no you don’t need to amend your tax return if there are no numbers on the K-1.
      Thank you,
      Lisa Greene-Lewis

  36. I purchased turbo tax deluxe without realizing I was going to get a K-1. Do I have to upgrade to turbo tax premium because of this?

    • Hi Phyllis,
      Code J. Section 59(e)(2) expenditures are on an attached statement, the partnership will show the type and the amount of qualified expenditures for which you may make a section 59(e) election. The statement will also identify the property for which the expenditures were paid or incurred. If there is more than one type of expenditure, the amount of each type will also be listed.
      Thank you,
      Lisa Greene-Lewis

  37. Which Turbo Tax do we use for personal returns involving K-1 forms from a trust. Is premium the proper one, this is what we’ve been using.

  38. While waiting for a reply here, I called the IRS. The rep said I do NOT need to report this unless the Partner’s ID number in Part II Box E on the K-1 form is my ID (my Social security). Turns out the ID number on the forms I got was the ID of my ROTH IRA, which she said is not a taxable entity, therefore I can ignore these forms–they’re just for my records. I asked if it matters whether Box 20 V exceeded $1000–maybe sometime in the future when the proceeds accumulate–and she reiterated: If Box E has the Roth’s ID number it doesn’t matter how much is in Box 20 V, because a Roth is a non-taxable entity

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