I Received a K-1. What Is It?

Income and Investments

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.

Comments (145) Leave your comment

  1. 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

  2. On my K-1, I’ve got numbers for lines 20 Y1 (Gross receipts for UBTI), Y2 (Gross deductions for UBTI), and Y3 (Federal bonus depreciation included in line 1). It is not clear where these should go. Right now I have them listed as “Other” under the section “Code Y” but did not total the values. Is this correct, or should I look for somewhere else to enter these?

  3. Hi – just received an unexpected K-1 for 2011, weeks after filing. Do I have to file an amended return if it shows a loss, both 8) short-term capital loss and 11) other income loss?
    Thanks, didnt see this question asked.

  4. If I did not receive any additional forms relating to three K-1’s for PA do I have to report any PA information on my state return? If so where do I get the #s if different from the federal K-1 #s?

  5. Using TTD Premier K-1 Line-L Current Year Increase. Should this be use to calculate cost basis. Have searched and cannot find where Line-L is used in the return.

  6. I am confused about the K-1 that my wife received from her father’s trust. It shows an amount in item 11 that is referred to as a deduction but it seems to have no effect on our final tax bill, rather we leave it in or take it out, it stays the same. Is it like a medical deduction in that it only applies over a certain percentage?

  7. I received both a k-1 form 1041 and a k-1 form 38 from my North Dakota trust. When doing my non resident ND taxes there is no spot to add the info from form 38. I am using Turbo Tax Delux, do I need a different version?

  8. I have a K-1 from a trust. TurboTax did not prompt for the fiduciary information. I assume I will need to enter this manually in the forms view, or did I miss something along the way?

    Thanks!

  9. I am using Turbo Tax Deluxe. I received a K1 that shows data in box 1 and box 3 how do I handle that?

  10. I have Turbo Tax Home & Business, and 3 K-1 statements from oil and gas investments. I found where to enter K-1 info on Turbo Tax, but according to CPAs I have talked to, this information should feed into a Schedule E where I can also claim deductions such as intangible drilling costs, depletion, and depreciation. But I can’t find where on TurboTax to enter the deductions. Can you help with that?

  11. I have passive and general category income on my K-1 forms. Turbo tax keeps wanting me to enter information on a K-1 worksheet to put that information on an IRS Form 1116. It does not work. What do I do?

  12. I received a 1065-B with an amount in box 2 (taxable income from passive activities); since this is an oil and gas partnership, it doesn’t make sense that this corresponds to the regular 1065 box 2 (rental) entry. Should I put it in box 1 on the Turbo Tax entry field? It also shows M5 (distributions) in the box 9 statement.

    A second 1065-B from a similar oil and gas partnership shows an amount in box 1 (taxable income from passive activities), a box 9 code of M5 for distributions, and a footnote that states: ‘Box 1 of your form is the qualified production activities income for purposes of computing the IRC section 199 deduction’. Would this equate to regular 1065 box 13 code T?

  13. I inadvertently entered too many categories for Box 13. I’m unable to remove these using the delete button. Any ideas how to remove so the program doesn’t keep asking for #’s input into these irrelevant categories?

  14. I purchased a block of partnership shares called Units in 2010 and sold them in 2011. They are for a very large group partnership publicly traded through my brokerage. I bought 450 “units” and sold 456 “units” – with 6 units coming from auto re-investment. They notified me preliminary tax info is available on their web site, which I downloaded. They also share they will not provide a K-1 until sometime in June. On the preliminary info it says my share of ordinary income is $127, Qualified dividend income is $14, long term capital gain (loss) is $23. The record of my purchase and sale is also listed. I cannot determine how to enter anything concerning this investment into turbo tax – none of the data I have so far seems to match the information requested by turbo-tax related to a schedule K-1. I am trying to file before April 15th to recover refund, but it almost looks like I need to file an extension until I get a K-1. Can I use turbo-tax to process the return prior to April 15, and if so, where in turbo tax do I enter the information I have?

  15. TurboTax says because I entered code F and either code D or code E in box 16 for a K-1 form that I must use separate K-1 worksheets to report more than one type of foreign gross income sourced at the entry level. How do I do that in TurboTax and won’t most entries on multiple K-1 for the same partnership use the same information? Thank you.

  16. My father-in-law pasted and has a trust. Is the money taxed before distribution or for each member recieving a distribution? What are the limits of taxation on inheritance?

  17. ARE DISBURSEMENTS FROM A FAMILY TRUST TAXABLE? OR JUST THE INTEREST AND DIVIDENTS EARNED FROM THE TRUST ACCOUNT. WHAT ABOUT THE SALE OF A HOME OWNED BY THE FAMILY TRUST?

  18. On my schedule K, in box 14, code H there is an amount. On Statements and Footnotes the description for Box 14, code H is “US interest included in box 1”. Is the amount State Income Tax Withheld (Backup Withholding.) or State Estimated Tax Credited to You. (State is Maryland.) Or both?

  19. I’m using TurobTax Premiere and am in the process of filling in K-1 information (from K-1’s I’ve received in the mail). I’m at the screen asking me to “describe your sales price and selling expense, and partnership basis.”

    Can you please tell me exactly how Turbotax defines “sales prices”, “selling expense”, and “partnership basis”, or point me to somewhere on the Net that I can find such?

    An example would be great. E.g., say I bought 100 shares of MLP XYZ for $10/share + $5 commission on 1/1/2011. I then sold 50 shares of XYZ for $12/share + $5 commission on 6/1/2011, and then sold the remaining 50 shares of XYZ for $11/share + $5 commission on 12/1/2011.

    What would the “sales prices”, “selling expense”, and “partnership basis” be?

    Thank you very much,
    Mark

  20. If I invest in a Master Limited Partnership, which sends me a K-1, and that MLP investment is in my Roth IRA, do I need to do anything at all with the K-1? It seems to me that I need do nothing with the K-1. I’ve been surprised before, so I’m asking you for your insight. Thank you.

  21. Sounds like I upgraded to Business just to enter a K-1. Now you tell me it is not necessary. I’ve established a business that has no purpose other than to report K-1 income. And I still can’t figure out hoe to enter K-1 income. HELP!!

  22. I have many k-1 from oil and gas pipelines to enter for federal taxes. I also have four residential rentals with a profit. I need to know if the premier or other computer program can handle these for me?? Can I use the program for free and see if I like it before I pay for it?? Bill

    1. 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

      1. But other investments in an IRA are not entered (trades, dividends, interest, etc) in your tax return?

      2. Hi Lisa,
        I received a K-1 from an entity held in my IRA as well, the form doesn’t reflect my SS# nor my Brokerage firm Federal Identification Number I have on my 1099-R, but does have a Partner’s Identifying number and the Partner’s name, address area reflects (Brokerage firm name) Custodian FBO (my name) IRA with my adress. Do I still include this in my 2011 tax filing/return? Thanks.

      3. I, too, received K-1’s for investments in my IRA. Because of interest and royalties on some of them, my income taxes are higher, according to TurboTax. Is it correct that I must pay taxes on what are supposed to be tax-sheltered investments? Won’t I have to pay taxes on the same income when I withdraw those funds from my IRA?

  23. 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.

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

  24. Working on K-1 in Premier. Got stuck when I got to the “Enter Sales Price” page. My partnership was sold. What do you enter in this blanks. How does it know if it is long or short term if it was bought various times?

  25. I have received a K-1 for an investment that is in a Roth IRA. I have not retired and I am not receiving any payments from the Roth. Does this need to reported?

  26. I received a K-1 From a publicly traded energy partnership that I have invested in through my IRA account. When I enter the info into turbotax I do not see an option to select this as an IRA account and turbotax is treating the gains as taxable income. Is this correct or am I doing something wrong?

  27. I received K-1s for the public Limited Partnership securities in my IRA account. Do I need to file them with my tax return?

  28. I’ve been receiving a Form 1065 K-1 from a publicly-traded partnership for several years, and found it fairly straightforward to enter the data in TurboTax Deluxe. The only complication was that the partnership reported values in both Box 1 and Box 3, so I had to fill out two K-1s every year.

    In 2011, I sold half of my shares in the partnership. I understand that ROC in previous years decreased my basis, and that information has been reported to me. The problem I have is that it seems like I’m entering the sale twice — with reduced basis on the K-1 and with its full original basis as a stock sale on Schedule D. Is that how it should be done? Or should I remove the sale I’d already put in the return I’m working on?

  29. 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?

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

  30. 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?

    1. 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

  31. 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?

    1. 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

      1. 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.

      2. 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

    1. 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

  32. Got the k-1(estate distribution). Turbo tax ask questions on line 14 that are not on this form – such as – what country is the income from that relates to tax small tax paid, There are more questions for line 14 we can’t answerr. In addition line 11 had no amt in it but box E is checked for final K-1. I’m confused.

  33. 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?

  34. I sold an interest (unit) in a traded Limited Partnership. Do i show this as an “other” type of investment when entering the sale in the Turbo Tax investment sale section?

  35. On my K-1 there is a supplemental information page for PA, do I have to file in the state of PA? It has PA-40 Line 4 or PA-41, Line 3 loss of $32.
    Schedule A Interest income gain of $21. Then zero for schedule B and D (dividend income and net gain/loss from disposition of property).

    In addition, there is a page with 23 states listed but very little monies involved. Do I have to file in each state?

    Thank you.

  36. I am looking for more detailed instructions on how to handle boxes 13 and 20 on a given K-1 entry in Turbo Tax Premier. The reason I ask is that the input fields and the data provided on the K-1 do not match up well, particularly with box 20 and what they call “Other information – Code Y”. This is my first time handling this kind of statement as well as Turbo Tax so guidance here would be appreciated.

  37. I’m supposed to receive 2 K-1s. One for a Life Insurance Trust and another for a Life Trust. I received the K-1 for the Life Insurance Trust and it listed a small amount for a excess deduction (11A) and a slightly larger amount for a long-term capital loss carry over (11C). There is also a $9 amount in (14B) foreign taxes. When I list the amount in Turbo Tax, do I need to list the amount of the Life Insurance Trust payout?

  38. If the K-1 comes from a company in IRA retirement account, do you have to include the info on your tax return? I received one last year before I had filed my taxes, so I included the info, if I used it last year do I have to use it this year?

  39. I received a K-1 with Part II Item I indicating type of entity is IRA/SEP. Do I need to report this anywhere?
    do I treat it the same as a K-1 for an INDIVIDUAL?

    1. 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

  40. 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.

      1. My 18yo daughter received a K1 from a matured Giftrust Year ending 2011. I use TT Premium; On the Sched. K-1 (Form 1041) in Part III, 11A the final year deduction lists $10. The state Schedule K-1-T had no numbers listed in sections 3, 4, 5 or 6. Can I enter her K1 on my tax return since my daughter is listed as a dependent on my return or does she need to complete/file her own tax return? I’m confused, as the amount is so small and because she is listed as a dependent. In the letter from the Giftrust, it stated that she needs to complete a form 4970 which reports prior year income that may be subject to throwback taxes. Also, if she has to file her own return, is it better to file 1040 or 1040EZ or something else and attach the 4970 to it?

      2. Well I am one of those trust dummies as this is my first go around on a trust for a VA spouse. (long story). Can I use the Turbotax Deluxe to enter the K-1 data or do I need to upgrade to Premier or Business TT?

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