Taxes 101 What is a Schedule K-1 Form? Read the Article Open Share Drawer Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Pinterest (Opens in new window)Click to print (Opens in new window) Written by Published Jan 3, 2011 - [Updated Jul 8, 2019] 3 min read If you are an owner of a partnership, LLC, S-corp, or other entity that passes through taxes to its owners, in most cases you will receive a K-1 form each year. The K-1 is prepared by the entity to distribute to owners/shareholders to outline their portion of the income, loss, and deductions. Similar to a 1099 form received that highlights contractor income, you do not have to file the K-1 with your personal income tax return. Instead, you use the data on the form to fill out portions of your personal tax return. Preparing a K-1 For Shareholders While a K-1 form is easy if you’re just the recipient needing to record income or losses, the process is a bit more detailed for owners of an S-corp, LLC, or partnership who are responsible for distributing the K-1 forms to members. Not only do you need to report net profit or loss, but some financial data must be tracked individually. The S-corp or partnership must report certain income and expenses separately from the net profit or loss amount. These income and expense items retain their tax characteristics when passed-through to the shareholder, and are subject to the limits and tax rates on each shareholder’s personal Form 1040. Separately stated items are the following: Section 1231 gains and losses, Net short-term capital gains and losses, Net long-term capital gains and losses, Dividends eligible for the dividends received deduction (if a shareholder is a C-Corporation), Charitable contributions, Taxes paid to a foreign country, Tax-exempt interest and related expenses, Investment income and expenses, Amounts previously deducted, such as bad debts, Real estate income and expenses, Section 179 deductions, Tax credits, and Non-deductible expenses, such as 50% of meals and entertainment expenses. In addition, you must send out your K-1 forms to shareholders by March 15th. The Unexpected K-1 Obviously, if you’re an active member in a partnership or other business that regularly issues K-1s it will come as no surprise when you receive one each year. But there are situations where you may appear to get a K-1 out of the blue, and this can throw you for a loop. When this happens it’s almost always due to an investment in an ETF or fund that’s operating as a limited partnership. This isn’t always obvious to a regular investor, but buying shares of a commodity fund may in fact make you a part owner of a partnership. That means at the end of the year you’ll receive a K-1 outlining your share of the partnership’s profit or loss. This can come as quite a surprise for a new investor. One way to tackle this issue is to hold your ETFs or other investments that are limited partnerships inside an IRA. You’ll still get a K-1 at the end of the year, but the taxes are still deferred and it won’t require any additional tax calculations on your end. If you’re holding these in a taxable account, though, it’s a good idea to use good tax preparation software that will guide you through the process. Here’s what Forbes has to say about how TurboTax handles K-1 forms. Previous Post How is Your Retirement Savings Taxed? Next Post How to Adjust Your Tax Withholding for the New Year Written by More from 168 responses to “What is a Schedule K-1 Form?” « Older Comments Newer Comments » I have 4 K-1’s, all within my retirement IRA. 3 are for commodity type ETF’s, 1 from a LLC. IN TurboTax I don’t find where I report these K-1″s are not taxable with-in my IRA. I am retired and did receive distributions which are reported in a 1099-R and are part of my taxable income? Reply Hi Bryan, If these K-1s are within your IRA they are probably for informational purposes. Check to see if they indicate your social security number or the ID number of the IRA account. If they indicate the ID number of the IRA account they are just for information and you do not have to file them. Thank you, Lisa Greene-Lewis Reply I have a K-1 that has amounts in boxes 1, 2 & 3. As I understand TurboTax, it wants me to submit this as 3 different K-1s. When I do (and fill out all the information for each one), I end up with triplicate taxation in several categories (e.g., int income, div income, capital gains, etc.). What am I doing incorrectly? Reply Hi Tim, Box 1 – Business Income, Box 2 – Rental, Box 3 – Other Income are all related to different types of income which are all reported on different tax forms and would each be taxed. Without seeing the specific income you have they should be reported on the appropriate schedules and then the income on the schedules should appear on your 1040 form where it is all taxed depending on your final tax liability. For instance, Box 2 – Rental income should be reported on schedule E and then go to your 1040. If you are not comfortable with the entries, please contact our free tax experts so they can speak to you live. You can contact then through TurboTax online or at 1.800.4.intuit. Thank you, Lisa Greene-Lewis Reply Hi Lisa can i report 2007/ 2008 sch k1 on my 2011 tax returns Reply Hi Nana, Unfortunately you cannot. You will have amend both your 2007 and 2008 tax returns and add your k-1 information for those years. Thank you, Lisa Greene-Lewis Reply My husband works with one partner the partnership is established as an LLC. The LLC files taxes and then my husband gets a K1 with his half of the income from the LLC partnership. When he files his pesonal taxes, the only income he has is from the LLC partnership K1 income. On his personal tax information is he considered a sole proprietor, contractor, self employed or does he just file under his full name? And once he establishes which one of the options stated above he needs to file under what program does he need to file the personal taxes that will carry the K1 infomation and income over to the personal tax forms? He and his partner have already filed the business portion of the taxes, he now needs to file on that K1 income from the business and we don’t know which program we need to use and we need to know what his title needs to be entered as on the persona taxes? We’ve been really confused about this last year we purchased H and R Block Home Premium and it didn’t carry over the K1 income. Please help!!! Reply Hi Patricia, You can use either Deluxe or Premier. Please see this comparison guide. https://turbotax.intuit.com/personal-taxes/compare.jsp Regarding your husband’s personal taxes, he should file under his full personal name that he usually files his personal taxes under. He would not be considered a sole propiertor or self-employed if he invested in the partnership with one other partner. If the K-1 income is all he has, that income will flow through to the correct forms (form 1040, schedule E, etc) depending on the type of income and your entries. TurboTax will guide you through the entries. In addition, if you have any further questions you can go through TurboTax online and get answers to your questions from our tax experts for free. Thank you, Lisa Greene-Lewis Reply If I own an llc. My investor bought into the company do I have to send him a K-1 Reply Hi Jay, Yes you do have to issue a K-1. You can use TurboTax Business to generate the K-1 for your investor. Thank you, Lisa Greene-Lewis Reply A k-1 shows there are capital gains and other income which I never reseived, but I have to pay for the tax ? Reply Hi Kaolin, If you never received them and you think there is an error you need to call the company who issued the K-1 as this information is reported to the IRS. Thank you, Lisa Greene-Lewis Reply What do I do If I do not receive my K1’s by March 15th? Reply Hi Josh, You should call the institution(s) that should have issued them to find out if they are late sending them to you. You will need them to prepare your taxes, because the information on K-1s is also reported to the IRS and that information has to match what is reported on your tax return. Thank you, Lisa Greene-Lewis Reply Hi, I have already submit my taxes with my wife(using turbo tax) and i just received k1 for 3 stocks I own(LLC) What should I do? Reply Hi M, Wait to see if your tax return is accepted. If it is, then you will have to amend your tax return and add that information. If it is rejected you can fix your tax return. Thank you, Lisa Greene-Lewis Reply Hi, I read this in heartfelt aegnrmeet. I train and represent a number of performing arts institutions on withholding matters and see first hand the lost of cultural experiences available to Americans because of the complexities of these rules. They were written with an eye on large dollars and big name tickets, but sweep widely across all lines. You should also be aware that in a recent IRS forum, an IRS Chief Counsel representative opined that accountable plan rules cannot be used to exempt travel and other expense reimbursement related to the entertainment from the 30% withholdable tax base. He did say he would look at it again and we wait with baited breath on the result.To borrow from your recommendations: Artists, Presenters, Managers and Arts Organizations may wish to join forces to lobby Congress to take this situation out of the hands of the administrative agency (IRS) by crafting a comprehensive solution to the issues presented by the current tax scheme. Reply Lisa, still waiting for a response. Why is everyone else’s questions answered and not mine? Need to file this week. Reply Hi Greg, Please resend your question. I will look out for it. Or you can call 1.800.4.intuit Thank you, Lisa Greene-Lewis Reply I also have a negative # for my K-1 and it isn’t accepted. You said above to make sure your loss isn’t greater than the basis which is my cost of the investment. I have no idea what my cost of the investment is. Reply « Older Comments Newer Comments » Leave a ReplyCancel reply Browse Related Articles Business Taxes S-Corp Taxes: A Business Owner’s Guide Business Taxes How Do LLC Taxes Work? Income and Investments Schedule (K-1) Instructions: How to File in 11 Steps Business Taxes Filing Business Taxes for an LLC for the First Time Business Taxes Small Business Taxes: Expert Advice for Filing Your Return Income and Investments I Received a K-1. What Is It? Business Taxes The Basics of Taxation on Business Business Income What Tax Forms to File as a First-Time Business Owner Business Income Schedule K-1, Taxes, and You Business What Is Form 2553 & Which Businesses Use It?
I have 4 K-1’s, all within my retirement IRA. 3 are for commodity type ETF’s, 1 from a LLC. IN TurboTax I don’t find where I report these K-1″s are not taxable with-in my IRA. I am retired and did receive distributions which are reported in a 1099-R and are part of my taxable income? Reply
Hi Bryan, If these K-1s are within your IRA they are probably for informational purposes. Check to see if they indicate your social security number or the ID number of the IRA account. If they indicate the ID number of the IRA account they are just for information and you do not have to file them. Thank you, Lisa Greene-Lewis Reply
I have a K-1 that has amounts in boxes 1, 2 & 3. As I understand TurboTax, it wants me to submit this as 3 different K-1s. When I do (and fill out all the information for each one), I end up with triplicate taxation in several categories (e.g., int income, div income, capital gains, etc.). What am I doing incorrectly? Reply
Hi Tim, Box 1 – Business Income, Box 2 – Rental, Box 3 – Other Income are all related to different types of income which are all reported on different tax forms and would each be taxed. Without seeing the specific income you have they should be reported on the appropriate schedules and then the income on the schedules should appear on your 1040 form where it is all taxed depending on your final tax liability. For instance, Box 2 – Rental income should be reported on schedule E and then go to your 1040. If you are not comfortable with the entries, please contact our free tax experts so they can speak to you live. You can contact then through TurboTax online or at 1.800.4.intuit. Thank you, Lisa Greene-Lewis Reply
Hi Nana, Unfortunately you cannot. You will have amend both your 2007 and 2008 tax returns and add your k-1 information for those years. Thank you, Lisa Greene-Lewis Reply
My husband works with one partner the partnership is established as an LLC. The LLC files taxes and then my husband gets a K1 with his half of the income from the LLC partnership. When he files his pesonal taxes, the only income he has is from the LLC partnership K1 income. On his personal tax information is he considered a sole proprietor, contractor, self employed or does he just file under his full name? And once he establishes which one of the options stated above he needs to file under what program does he need to file the personal taxes that will carry the K1 infomation and income over to the personal tax forms? He and his partner have already filed the business portion of the taxes, he now needs to file on that K1 income from the business and we don’t know which program we need to use and we need to know what his title needs to be entered as on the persona taxes? We’ve been really confused about this last year we purchased H and R Block Home Premium and it didn’t carry over the K1 income. Please help!!! Reply
Hi Patricia, You can use either Deluxe or Premier. Please see this comparison guide. https://turbotax.intuit.com/personal-taxes/compare.jsp Regarding your husband’s personal taxes, he should file under his full personal name that he usually files his personal taxes under. He would not be considered a sole propiertor or self-employed if he invested in the partnership with one other partner. If the K-1 income is all he has, that income will flow through to the correct forms (form 1040, schedule E, etc) depending on the type of income and your entries. TurboTax will guide you through the entries. In addition, if you have any further questions you can go through TurboTax online and get answers to your questions from our tax experts for free. Thank you, Lisa Greene-Lewis Reply
Hi Jay, Yes you do have to issue a K-1. You can use TurboTax Business to generate the K-1 for your investor. Thank you, Lisa Greene-Lewis Reply
A k-1 shows there are capital gains and other income which I never reseived, but I have to pay for the tax ? Reply
Hi Kaolin, If you never received them and you think there is an error you need to call the company who issued the K-1 as this information is reported to the IRS. Thank you, Lisa Greene-Lewis Reply
Hi Josh, You should call the institution(s) that should have issued them to find out if they are late sending them to you. You will need them to prepare your taxes, because the information on K-1s is also reported to the IRS and that information has to match what is reported on your tax return. Thank you, Lisa Greene-Lewis Reply
Hi, I have already submit my taxes with my wife(using turbo tax) and i just received k1 for 3 stocks I own(LLC) What should I do? Reply
Hi M, Wait to see if your tax return is accepted. If it is, then you will have to amend your tax return and add that information. If it is rejected you can fix your tax return. Thank you, Lisa Greene-Lewis Reply
Hi, I read this in heartfelt aegnrmeet. I train and represent a number of performing arts institutions on withholding matters and see first hand the lost of cultural experiences available to Americans because of the complexities of these rules. They were written with an eye on large dollars and big name tickets, but sweep widely across all lines. You should also be aware that in a recent IRS forum, an IRS Chief Counsel representative opined that accountable plan rules cannot be used to exempt travel and other expense reimbursement related to the entertainment from the 30% withholdable tax base. He did say he would look at it again and we wait with baited breath on the result.To borrow from your recommendations: Artists, Presenters, Managers and Arts Organizations may wish to join forces to lobby Congress to take this situation out of the hands of the administrative agency (IRS) by crafting a comprehensive solution to the issues presented by the current tax scheme. Reply
Lisa, still waiting for a response. Why is everyone else’s questions answered and not mine? Need to file this week. Reply
Hi Greg, Please resend your question. I will look out for it. Or you can call 1.800.4.intuit Thank you, Lisa Greene-Lewis Reply
I also have a negative # for my K-1 and it isn’t accepted. You said above to make sure your loss isn’t greater than the basis which is my cost of the investment. I have no idea what my cost of the investment is. Reply