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 » Three partners left the LLC in April 2011… they sent me a K1 regarding the 4 months they were still members. I continued to liquidate the inventory as sole owner under the same EIN for the rest of 2011. The LLC was issued a 1099 by PayPal that was not included on the tax returned done without my knowledge by the non-members. Were they legally allowed to do the LLC taxes for 2011 (4 months only) without my knowledge and pertinent information. They also took all the inventory I sold as their cost of goods deduction. I am now left with a big tax bill and I feel they must have done this illegally??? Reply Hi, was wondering my previous buiness partner just now sent me a k-1 on july 20th do i have to report this because of how late he was? Reply I received a K-1 from my deceased father’s trust. I received non-taxable income from the trust but not any taxable income. Should I have received the amount on the K-1? Reply Hi. I hope you can clear up some confusion on my part. I live in Indiana, and saw the passing of an uncle early last year. He lived and died in Illinois, and the one in charge of his estate lives and works in Tennessee. The estate was worth approx. $1.7 million, and I was under the understanding that it was exempt from estate tax due to its size, and that as a “Hoosier”, our distribution as heirs did not exceed the state minimum on which taxes begin to acrue. So, what is the Form K about? Is this merely for the division of expenses of the estate midst the co-heirs or is their some tax liability I’m not understanding? Thanks for clearing things up. Revel Reply Hi Revel, Estate tax is the tax imposed by the federal government and some states based on the value of the deceased assets. For 2011 if the value of the assets was less than $5 million (5,120,000 in 2012), then you are right, the estate is exempt from estate taxes. However, if the estate earns income such as interest, dividends, or rents and distributes that income to you then you will be subject to taxes. Property received as a gift, inheritance, or bequest(through a last will and testament) is usually not included in your income, however if the property you receive later produces income such as interest, dividends, or rents then it may be taxable. Thank you, Lisa Greene-Lewis https://blog.turbotax.intuit.com Reply Hello Lisa, If my K-1 is delayed and that is only source of income, how can I do my personal taxes to apply mortgage interest deductions, child exemptions, etc without the K-1 Income. Do I have to wait, or can I do it without the income. Reply I just received a K1 on my mother’s estate. I’m assuming the property has been sold (it had been foreclosed) on the form it lists $25,339 as a capital loss carryover. Do I need to do anything with this? Reply Hi, I received K-1 data on form 1065 that shows I own only 18.1800000% of a rental LLC partnership. I lost money on my initial investment last year and also again this year. But when I input the data as a negative loss on the Turbo Tax K-1 form, it shows 0 and not the amount that I loss from rental. What am I doing wrong? (this is my 1st time using Turbo Tax) Joy Reply Hi Joy, Please make sure your loss isn’t greater than the basis, which is your cost of the investment. Your loss cannot be greater than your investment. If you are still having trouble, please go to our free live tax advice so they can walk you through live via chat or phone. It will be easier to go through the interview screens with them live. You can get to our tax experts through the tax program or 1.800.4.intuit. Thank you, Lisa Greene-Lewis Reply High Lisa i know with the tax dead line has almost ended you are very busy. All the same can you please response to my question about 2007/2008 sch K1 if i can report it on my 2011 tax Reply Hi Nana, Not sure if you saw my answer earlier. Unfortunately, you cannot file your 2007/2008 K-1s on your 2011 tax return. You need to amend your previous tax returns. One thing to note, you can only go back and amend 3 years from the date of the original return or 2 years from the date you paid tax which ever is later so you will not be able to amend the 2007 tax return. Thank you, Lisa Greene-Lewis Reply Hi, I am expecting to receive a K1 statement for money I received from a trust. My taxes are ready to go aside for that. I was already told I wouldnt receive that statement ill after the filing deadline. Is it best to just file as is and amend when I receive that form? I know I am going to owe money, just not sure the best way to take care of this. Reply Hi, If you did receive the money and you know you will receive the K-1 it is best to file accurate taxes. You can file an extension on TurboTax online and then you should pay your tax liability with your extension so you don’t receive a penalties. https://blog.turbotax.intuit.com/2012/04/11/tax-extensions-extension-to-file-not-pay/ Thank you, Lisa Greene-Lewis Reply I have not received a K1 statement yet for money coming in through a trust. My taxes are filed and ready to go aside for that information. Is it best to just file and then amend the return when I get that statement? I know money will be owed, I just dont have a clue as to how much. 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Three partners left the LLC in April 2011… they sent me a K1 regarding the 4 months they were still members. I continued to liquidate the inventory as sole owner under the same EIN for the rest of 2011. The LLC was issued a 1099 by PayPal that was not included on the tax returned done without my knowledge by the non-members. Were they legally allowed to do the LLC taxes for 2011 (4 months only) without my knowledge and pertinent information. They also took all the inventory I sold as their cost of goods deduction. I am now left with a big tax bill and I feel they must have done this illegally??? Reply
Hi, was wondering my previous buiness partner just now sent me a k-1 on july 20th do i have to report this because of how late he was? Reply
I received a K-1 from my deceased father’s trust. I received non-taxable income from the trust but not any taxable income. Should I have received the amount on the K-1? Reply
Hi. I hope you can clear up some confusion on my part. I live in Indiana, and saw the passing of an uncle early last year. He lived and died in Illinois, and the one in charge of his estate lives and works in Tennessee. The estate was worth approx. $1.7 million, and I was under the understanding that it was exempt from estate tax due to its size, and that as a “Hoosier”, our distribution as heirs did not exceed the state minimum on which taxes begin to acrue. So, what is the Form K about? Is this merely for the division of expenses of the estate midst the co-heirs or is their some tax liability I’m not understanding? Thanks for clearing things up. Revel Reply
Hi Revel, Estate tax is the tax imposed by the federal government and some states based on the value of the deceased assets. For 2011 if the value of the assets was less than $5 million (5,120,000 in 2012), then you are right, the estate is exempt from estate taxes. However, if the estate earns income such as interest, dividends, or rents and distributes that income to you then you will be subject to taxes. Property received as a gift, inheritance, or bequest(through a last will and testament) is usually not included in your income, however if the property you receive later produces income such as interest, dividends, or rents then it may be taxable. Thank you, Lisa Greene-Lewis https://blog.turbotax.intuit.com Reply
Hello Lisa, If my K-1 is delayed and that is only source of income, how can I do my personal taxes to apply mortgage interest deductions, child exemptions, etc without the K-1 Income. Do I have to wait, or can I do it without the income. Reply
I just received a K1 on my mother’s estate. I’m assuming the property has been sold (it had been foreclosed) on the form it lists $25,339 as a capital loss carryover. Do I need to do anything with this? Reply
Hi, I received K-1 data on form 1065 that shows I own only 18.1800000% of a rental LLC partnership. I lost money on my initial investment last year and also again this year. But when I input the data as a negative loss on the Turbo Tax K-1 form, it shows 0 and not the amount that I loss from rental. What am I doing wrong? (this is my 1st time using Turbo Tax) Joy Reply
Hi Joy, Please make sure your loss isn’t greater than the basis, which is your cost of the investment. Your loss cannot be greater than your investment. If you are still having trouble, please go to our free live tax advice so they can walk you through live via chat or phone. It will be easier to go through the interview screens with them live. You can get to our tax experts through the tax program or 1.800.4.intuit. Thank you, Lisa Greene-Lewis Reply
High Lisa i know with the tax dead line has almost ended you are very busy. All the same can you please response to my question about 2007/2008 sch K1 if i can report it on my 2011 tax Reply
Hi Nana, Not sure if you saw my answer earlier. Unfortunately, you cannot file your 2007/2008 K-1s on your 2011 tax return. You need to amend your previous tax returns. One thing to note, you can only go back and amend 3 years from the date of the original return or 2 years from the date you paid tax which ever is later so you will not be able to amend the 2007 tax return. Thank you, Lisa Greene-Lewis Reply
Hi, I am expecting to receive a K1 statement for money I received from a trust. My taxes are ready to go aside for that. I was already told I wouldnt receive that statement ill after the filing deadline. Is it best to just file as is and amend when I receive that form? I know I am going to owe money, just not sure the best way to take care of this. Reply
Hi, If you did receive the money and you know you will receive the K-1 it is best to file accurate taxes. You can file an extension on TurboTax online and then you should pay your tax liability with your extension so you don’t receive a penalties. https://blog.turbotax.intuit.com/2012/04/11/tax-extensions-extension-to-file-not-pay/ Thank you, Lisa Greene-Lewis Reply
I have not received a K1 statement yet for money coming in through a trust. My taxes are filed and ready to go aside for that information. Is it best to just file and then amend the return when I get that statement? I know money will be owed, I just dont have a clue as to how much. Reply