Back to Blog

What is a Schedule K-1?

Image of Christian Brim
Christian Brim
What is a Schedule K-1?

The tax code is a confusing place for an entrepreneur, and it uses a whole different language.  One of the common forms business owners receive is a schedule K-1.  So What is a Schedule K-1?  Glad you asked! Let's discuss...

What is a Form Schedule K-1?

A form Schedule K-1 is a part of the tax return filed for any "flow-through" entity.  Flow through means that the business entity generally does not pay tax, but the applicable income or loss flows through to the shareholders/partners.  Businesses that have K-1's include S-Corporations and Partnerships, but they are also used for other entities like trusts.  Each shareholder or partner will have a K-1 that is included with the tax return filed for the business, and the business is required to provide copies of the filed K-1 to each member.

Generally there is only one page to the K-1, plus a page explaining all of the various codes.  Occasionally there are additional pages for additional information, usually for state tax purposes.

What it is does

The Schedule K-1 details various tax items from the company/partnership to include on an individuals tax return.  These tax items included the different types of income (or loss), tax credits, and additional information to compute your individual taxes.

What do I do with a Schedule K-1?

It might seem simple, but make sure to give it to your tax preparer.  Why? Because copies are filed with the IRS, you will want to make sure that all schedule K-1's are included in your individual tax return.  Leaving one off will generate a love letter from the IRS and increase your chances of an audit.  Give it to your preparer even if there is nothing on it! Something could be hiding, and you don't want to miss it!

#growprofitably

How To Lower Taxes Strategically-Download Now


Related Posts

How I Overcame My Persistent Ignorance

How I Overcame My Persistent Ignorance | Core Group US

Image of Christian Brim
Christian Brim

According to Merriam and Webster, Ignorant and Ignore share a root Latin word which meant “to...

Read more
Deferring Taxes for Retirement

Is Deferring Taxes Best for Retirement Savings | Core Group US

Image of Christian Brim
Christian Brim

Deferring taxes with retirement savings is a key selling point for financial advisors.  I mean, who...

Read more