K-1 tax form: How to fill out & schedule your K-1

Navigating tax season as a small business owner can be overwhelming — especially with the number of forms and requirements involved. If you’re in a business partnership, a shareholder in an S corporation, or even the beneficiary of a trust, you’ll receive a Schedule K-1 form.

In this article, we’ll break down what the Schedule K-1 form is, who needs to file it, and the different types of K-1 forms.

What is the K-1 tax form?

Schedule K-1 is a tax form that reports a pass-through entity’s income, losses, and dividends to its owners or investors. Pass-through entities are businesses that do not pay corporate income tax. Instead, the profits and losses are “passed through” to the individual owners or investors, who report this information on their personal tax returns.

The K-1 form is an essential part of a business’ tax return, providing a breakdown of each owner’s or shareholder’s piece of the business’s profit or losses for the tax year.

What’s included on a K-1 tax form?

A K-1 tax form contains income, deductions, and credits allocated to each partner or shareholder. Information includes the partner’s or shareholder’s:

Identifying information (name, address, and Social Security number or tax identification number)
Share of income, deductions, and credits
Capital account analysis
Share of liabilities and capital contribution
Distributions (e.g., ordinary business income, rental income, and interest income)

Who needs to file a Schedule K-1 tax form?

Schedule K-1 is typically filed by owners or investors in pass-through entities, such as:

Partnerships
S Corporations
Estates
Trusts

If you’re the owner of a partnership or S corporation, you won’t file a Schedule K-1 with the IRS yourself. You’ll use the information from your Schedule K-1 to report your share of the business’s income, deductions, and credits on your personal Form 1040, along with any other income or losses.

The owner provides each partner or shareholder a copy of their K-1 form to report their individual tax returns. Those who would typically receive a K-1 form include:

Business owners, co-owners, and partners
Shareholders
Those who receive income or other assets from a trust or estate

Types of Schedule K-1 forms

There are three main types of Schedule K-1 forms. The type of form you work with is based on the pass-through entity you’re involved with.

While the purpose of all three types of Schedule K-1 forms is similar — to report each partner’s, shareholder’s, or beneficiary’s share of income and losses — the specific information on each form may vary slightly depending on the entity type.

Partnership K-1 form

Form 1065 is used for partnerships, including general partnerships, limited partnerships, and limited liability partnerships (LLPs). It includes each partner’s share of the partnership’s income, deductions, and credits. The partnership must provide a copy of Schedule K-1 to each partner and file Form 1065 with the IRS.

S Corporation K-1 form

S Corporations use Form 1120-S. It reports each shareholder’s portion of the corporation’s income, deductions, and credits. The S Corporation must provide a copy of Schedule K-1 to each shareholder and file Form 1120-S with the IRS.

As a shareholder, you’ll use the information from your Schedule K-1 to complete various parts of your Form 1040, similar to the partnership K-1 form.

Estate or trust K-1 form

Form 1041 is used by estates and trusts to report each beneficiary’s share of the estate or trust’s income, deductions, and credits. The estate or trust must provide a copy of Schedule K-1 to each beneficiary and file Form 1041 with the IRS.

What is the K-1 tax form due?

The deadline for filing K-1 tax forms depends on the type of business entity:

Partnerships and S Corporations: The deadline for partnerships and S corporations to both file their tax returns (Form 1065 or Form 1120S) and provide K-1 forms to partners or shareholders is March 15th (or the 15th day of the third month after the end of the company’s fiscal year).
Trusts and estates: Trusts and estates must file Form 1041 and provide K-1 forms to beneficiaries by April 15th (or the 15th day of the fourth month after the end of the trust’s or estate’s fiscal year).

If the entity files for an extension, the deadline for providing K-1 forms to partners, shareholders, or beneficiaries is also extended.

What happens if I don’t file a K-1?

If you receive a Schedule K-1, you must include that information on your tax return. If you don’t, then you may face certain consequences.

For one, if you don’t report the income from your Schedule K-1, you may be underreporting your total income to the IRS, which can lead to penalties and interest charges. Suppose the IRS receives a Schedule K-1 with your Social Security or Tax ID number, but you haven’t reported the information. In that case, it can delay the processing of your return and any potential refund.

Lastly, failing to include K-1 information on your tax return can raise red flags with the IRS and increase your chances of being audited.

That’s why reviewing any Schedule K-1 forms you receive is important and ensuring you include the information on your tax return.

How Swoop can help

At Swoop Funding, we understand that managing your business’s finances and taxes can be time-consuming. That’s why our platform simplifies the process of securing funding for your business so you can focus on what matters most: growing your company.

We offer:

Valuable resources: We offer guides to help you understand and prepare for tax season, including information on Schedule K-1 and other important forms.
Funding options: We can match you with lenders specializing in your industry and unique needs.
Expert advice: Our specialists are available to provide guidance and help you make the right decisions about your business’s future.

Scheduling K1 tax form: all you need to know