Schedule K-1 (Form 1065) is a tax form issued by a partnership, or an LLC taxed as a partnership, to report each partner's share of the business's income, deductions, credits, and other tax items for the tax year.
Partnerships are considered pass-through entities. That means the partnership generally does not pay federal income tax itself. Instead, income, losses, deductions, and credits pass through to the partners, who report their share on their individual tax returns.
What We Support
We support entering Schedule K-1 (Form 1065) information on a partner's tax return, including reporting K-1 amounts on:
- Form 1040
- Schedule E (Part II)
- Other required forms based on the K-1 boxes and codes, such as Schedule D or Form 1116
What We Don't Support
We do not support:
- Preparing or filing Form 1065, U.S. Return of Partnership Income
- Creating, issuing, correcting, or amending Schedule K-1 (Form 1065)
- Determining partnership allocations, capital accounts, or partner basis
- Advising on partnership-level elections or accounting methods
Who Receives Schedule K-1 (Form 1065)?
Schedule K-1 (Form 1065) may be issued to:
- General partners
- Limited partners
- Members of an LLC taxed as a partnership
Each recipient receives a K-1 showing their allocated share of the partnership's tax items.
What Information Is Reported on a K-1?
Schedule K-1 (Form 1065) can include a partner's share of:
- Ordinary business income or loss
- Rental income or loss
- Interest income, dividend income, and capital gains
- Guaranteed payments
- Deductions and tax credits
- Foreign income and foreign taxes paid
- Capital account information and year-over-year changes
Each item is identified by a box number and, in some cases, a code that determines how it should be reported on the partner's tax return.
How to Report Schedule K-1 (Form 1065)
Most information from Schedule K-1 (Form 1065) is reported on Schedule E (Part II), which then flows to Form 1040.
The exact reporting requirements depend on the type of income, deduction, or credit shown on the K-1.
Additional Forms That May Be Required
Depending on the box numbers and codes on your K-1, you may also need to complete additional forms, including:
- Schedule D for capital gains and losses
- Form 1116 for the Foreign Tax Credit
- Form 4952 for investment interest expense
- Form 6251 for Alternative Minimum Tax (AMT) adjustments
Always review the instructions provided with your Schedule K-1 to ensure amounts are reported correctly.
State Tax Considerations
Partnerships often operate in more than one state, which can create state tax filing requirements for partners.
Common state reporting issues include:
- State-specific Schedule K-1 forms
- Income sourced to multiple states
- Nonresident state tax returns
- Composite state returns filed by the partnership
- State tax withholding on behalf of nonresident partners
If state income tax was withheld by the partnership, that withholding is often reported on the K-1 and may be claimed as a credit on your state return.
Because state rules vary, partners may have filing obligations in states where they do not live but where the partnership conducts business.
When You'll Receive Schedule K-1
Partnerships generally provide Schedule K-1 to partners after completing Form 1065. Because partnership returns are often more complex than individual returns, K-1s may arrive later in the filing season than Forms W-2 or 1099.
It's important to wait until you receive all K-1 information before filing your tax return. Filing before receiving a K-1 may require amending your return later if additional income, deductions, or credits must be reported.