Key takeaways
- Partnerships issue K-1s with Form 1065, S corporations with Form 1120-S, and estates and trusts with Form 1041.
- Partnership and S corporation returns are due by the 15th day of the third month after the tax year ends, which is March 15 for calendar-year businesses. The K-1 must reach you by the same date.
- You keep the K-1 for your records and use it to fill in your return; you generally don’t attach it.
- Partners can deduct unreimbursed partnership expenses only if the partnership agreement required them to pay those costs.
What is a Schedule K-1?
Partnerships, S corporations, estates and trusts are “pass-through” entities. They file a return, but the profit or loss passes through to the owners or beneficiaries, who pay the tax. The K-1 is the slip that tells each person their share. Think of it as a W-2 for owners, except it covers profit, not wages.
The entity files a copy with the IRS, so the numbers on your return need to match it.
Track the business expenses behind your K-1 with the Manage Receipt app.
Who receives a K-1?
| You are | K-1 comes with | Typical due date (calendar year) |
|---|---|---|
| A partner in a partnership or multi-member LLC | Form 1065 | March 15 |
| A shareholder in an S corporation | Form 1120-S | March 15 |
| A beneficiary of an estate or trust | Form 1041 | April 15 |
| A single-member LLC owner or sole proprietor | No K-1 | You file Schedule C instead |
If the entity files for an extension, your K-1 can arrive months later. Partnerships can get an automatic six-month extension with Form 7004, per the Form 1065 instructions. That’s why many K-1 recipients file an extension on their own return too.
What’s on a K-1?
The partnership version has three parts: information about the partnership, information about you, and your share of the year’s income, deductions and credits. The boxes you’re most likely to use are:
- Ordinary business income or loss, your share of the trading profit.
- Guaranteed payments, amounts paid to a partner for services or capital regardless of profit.
- Self-employment earnings, which feed into self-employment tax for active partners.
- Section 199A information, used for the qualified business income (QBI) deduction.
- Distributions, cash or property you took out during the year.
Distributions aren’t the same as income. You pay tax on your share of profit even if the business kept the cash, so plan your estimated taxes around the K-1, not your bank balance.
Partner expenses you pay yourself
Partners often pay for things out of pocket: a client lunch, a conference, mileage. If the partnership reimburses you under its own plan, the business deducts it and it doesn’t touch your K-1.
If it doesn’t reimburse you, you may still be able to deduct the cost as an unreimbursed partnership expense (UPE). The Schedule E instructions allow it only for ordinary and necessary partnership expenses you were required to pay under the partnership agreement. You report them on a separate line of Schedule E, labeled “UPE.”
- Check that your partnership agreement says partners pay these costs personally.
- Keep every receipt, with the business purpose and date.
- Apply the normal limits, such as 50% for most business meals.
- Keep these receipts separate from personal spending and from reimbursed costs.
S corporation shareholders who work in the business are employees, so the UPE route doesn’t apply to them. They should get reimbursed under an accountable plan instead.
Keep partner expenses ready for Schedule E
Scan the receipts you pay personally for the partnership into Manage Receipt and tag them as partner expenses with a business purpose. At tax time, the AI tax report groups them by category, so you or your accountant can total your unreimbursed partnership expenses without digging through a year of email.
Explore AI Tax ReportsFrequently asked questions
Do I need receipts for K-1 income?
You don’t need receipts to report K-1 income; the partnership or S corporation keeps the business records. You do need receipts for any expenses you deduct yourself, such as unreimbursed partnership expenses. Keep them with the K-1 for at least as long as the return can be reviewed.
When are K-1s issued?
Partnerships and S corporations must furnish K-1s by their return due date, the 15th day of the third month after year-end. For calendar-year businesses that’s March 15, or the next business day. Estate and trust K-1s follow the Form 1041 date, April 15. Extensions can push K-1s to September or later.
Do I file my K-1 with my tax return?
Generally no. The IRS instructions say to keep the K-1 for your records and not attach it unless specifically required. Use its figures to complete your return, mostly Schedule E. The partnership or S corporation already sends a copy to the IRS.
Is K-1 income subject to self-employment tax?
It depends on your role. General partners and active LLC members usually owe self-employment tax on their share of business income and guaranteed payments, shown in the self-employment box. S corporation shareholders don’t pay self-employment tax on K-1 profit, but should take reasonable wages through payroll.