K-1 Form Basics to Help You Meet the Tax Deadline

Income and Investments

Are you trying to finish your tax return by the tax deadline, but you’re not sure what to do with the K-1 you received?  Jim Wang gives more information on K-1s to help you file before the deadline.

Did you receive a K-1 form? It’s not a common form for most taxpayers but questions about K-1s are some of the top questions we are seeing at this time in the season. This is a document that partnerships, LLCs, S-corps, estates, and trusts use to describe to owners/shareholders what income they are receiving from the entity.

iStock_000023477909XSmall

Basically, it’s a schedule that allows you to see what income you received during the tax year and the Schedule K-1 is used for pass through entities.  Realize, too, that you might receive a K-1 form if you are invested in a fund or an Exchange Traded Fund that operates as a partnership. As a result, you’ll get a form that states your portion of the profit or loss associated with the partnership.

If you are a partner or shareholder in a pass through entity, you probably received a copy of the Schedule K-1, filled out to describe how income has been distributed to you. The information from the K-1 is then put on your personal tax return.

The entity issuing the K-1 forms files them with the IRS. The recipients use their copies to make sure that they are paying the appropriate taxes.

Will You Get a K-1?

If you own a business with someone else, such as a partnership, then that business will issue you a K-1 to report your share of the income, credits, and deductions. If you own a business by yourself, either incorporated or as a sole proprietorship, then your business won’t issue a K-1.

There are a few other cases where you will receive a K-1 and not realize you were to get one – the most common has to do with your investments. If you invested in a master limited partnership (MLP), then you will receive a K-1 because MLPs are set up as partnerships with shareholders being limited partners in the enterprise. If you invested in an Exchange Traded Fund, some of those ETFs will issue K-1s if they are organized in a way that requires it. These ETFs are often trading in commodities such as gold, silver, natural gas, or oil.

Parts of the Schedule K-1

There are three different sections of the Schedule K-1:

  1. Issuing entity information: This section includes information about the entity issuing the K-1. It has the EIN, as well as the address and the IRS filing location of the entity. You can also find the publicly traded partnership status, if it applies.
  2. Partner/shareholder information: This is the area where the individual partner/shareholder information appears. It includes the tax ID number (usually a Social Security number) as well as name and address.
  3. Financial details: In this portion, the partner/shareholder can see information about his or her profits and losses related to the entities activities. So, if you have received a distribution from your LLC, or if you have income from a partnership or S-corp, this is where it will appear. Your losses also appear in this section. This is the longest section of the form, and additional pages might be attached if warranted.

The tricky part for you, the taxpayer, with a K-1 is timing. Unlike 1099 and W-2 forms, which are due to the taxpayer by the end of January (mid-February at the latest), a K-1 isn’t due until mid-March. Employers and banks know how much they’ve paid out to people by January 1st, so the 1099 and W-2 deadlines are reasonable. Since businesses need more time to file their tax returns, the K-1 isn’t due until March 15th. That gives you just a month before taxes are due.

If you actually own the business, you can prepare your own K-1 when you prepare your business taxes.

If you still have questions about your K-1, don’t forget TurboTax has tax experts who are CPAs, IRS enrolled agents, and tax attorneys available to answer your questions, free so you can file before the tax deadline.

Comments (11) Leave your comment

  1. I received my K-1 for the first time from my Partner – what do I do next? do I use it like a 1099 or Business income on a 1040?

  2. If a family member holds an interest bearing note as nominee for other members of the family, is he required to obtain a separate EIN to fill in on the K-1 or may he use his social security number?

  3. Im a limited partner in an MLP. Things I have read elsewhere say that if I sell my units (shares), I have to file state taxes in the states where the MLP does business, but I’ve not been able to find any details.

    Is it true I have to file state taxes for every state the MLP does business?

  4. I just received a K 1 from my dads anunity/life insurance my sister send the siblings all a K 1 included in that amount was reimbursement money I paid for our brothers funeral. Should that be included in the K1 total? That would make me pay taxes twice. Also will we have to pay penalties since we just receive it today? Please advise

  5. If the statement above “the K-1 isn’t due until March 15th” is true, then why did I only receive my two on April 3 and 11, respectively?

  6. We received a schedule k-1 after we filed our taxes last year. I suppose we have to file an amendment. Is that correct?

    1. Hi Gloria,
      Yes, you will have to file an amended tax return to reflect whatever was on the K-1 if that K-1 covers tax year 2012.
      Thank you,
      Lisa Greene-Lewis

  7. I did not receive a K-1. My CPA spoke to the distributor who says it is not necessary for the inheritance. My CPA wants something in writing or I hope they’ll accept an authoritative answer from someone else.. At an impasse.

  8. I received a K-1 form as a beneficiary to the estate of my late Uncle. I first received a distribution in 2012. The form is from 2012, but indicates a fiscal year from 6/1/12 to 5/31/13. Do I enter the amount shown (only on line 8) for 2013, or do I need to amend 2012. Using Turbo Tax for the past few year, this shouldn’t be hard to do, but what would be the best way to go about it? Thanks!

  9. I received K-1 and the amount on the form was the amount I used but IRS said that I cannot claim that loss, can you tell me why?

  10. Don’t know if you can help me. I received a K-1 from the executor of the estate I am an heir of. I received it by mail on April 16. According to the K-1 I have a “credit” of $15,000. I have asked for documentations that support the K-1. I have been told it is mainly from a sale of a house.

    My question that is still unanswered is just how was a loss value established from the date of the descendent without an appraisal vs a final selling price.

    I am past being able to file taxes and am worried about the IRS. I am also worried about whether the executor is being forthright. Any insight would be appreciated. I am not seeking legal advise and will not hold you accountable.

    Thank you.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s