Schedule K-1

Schedule K-1 is the form a pass-through entity issues to each owner reporting that owner's share of the entity's income, deductions, credits, and other tax items for the year. Partnerships issue K-1s from Form 1065, S corporations from Form 1120-S, and estates and trusts from Form 1041. The K-1 is not a bill and not cash: owners are taxed on their allocated share whether or not anything was distributed, which surprises many first-time investors in funds and syndications. Beyond the income lines, K-1s carry critical detail: QBI information, basis and capital account data, guaranteed payments, self-employment earnings for partners, and state-by-state sourcing. Because entity returns are due March 15 and are frequently extended to September 15, late K-1s are the most common reason individual returns go on extension.