Definition
A Schedule K-1 is the tax form that reports an owner's share of income, deductions, and credits from a partnership, S-corporation, or certain trusts.
How It Works
Pass-through entities issue a K-1 to each owner showing their share of the entity's tax items, which the owner reports on their personal return. K-1s often arrive late and can be complex, especially from investment partnerships.
Example
An investor in a real estate partnership receives a K-1 reporting their share of rental income and depreciation to include on their return.
Who It Applies To
Partners, S-corp shareholders, and beneficiaries of certain trusts.
Watch-Outs
K-1s frequently arrive close to or after the filing deadline, often requiring an extension, and may create filing obligations in multiple states.
