How to Fill Out and File a Schedule K-1

Taxpayers who own shares in a business partnership are liable for income tax on their shares of the partnership's income, regardless of whether or not the income is actually distributed to them. The IRS administers these requirement by requiring that partnerships file a U.S. Return of Partnership Income (IRS Form 1065) and provide each share-owning partner a Schedule K-1 to be filed with that partner's individual tax return.

Instructions

Difficulty: Moderate

Things You’ll Need:

• IRS Form 1065
• IRS Schedule K-1

Fill Out and File a Schedule K-1

1. Work from the partnership's listing of share-owning partners, usually found in the Corporate Book binder, which shows each partner's name, address, identifying number, status, type of entity, ownership share and capital account transactions.
2. Create a simple spreadsheet of all partners and their share percentages of each applicable line from the partnership's completed Form 1065.
3. Record the same partnership employer identification number, name and address and other partnership information under Part 1 of all Schedules K-1 that you will file for all partners.
4. Fill out Schedule K-1s for each partner based on the aforementioned spreadsheet and listing of share-owning partners.
5. Include individual partners as well as other entities that may own shares in the partnership, so that the percentages of ownership shown on all partners' K-1 forms under lines L and M of Part II total 100 percent and the dollar amounts on all partners' K-1 forms under Part III reflect the total dollar amounts for these items on your partnership's completed Form 1065.
6. Find the filing address for mailing in completed Forms K-1 and Form 1065, based on the partnership's location, under "Where to File" on page 4 of the IRS Form 1065 Instructions, or check page 3 for electronic filing procedures.
7. File completed Forms K-1 and Form 1065 together by the fifteenth day of the fourth month following the end of your partnership's tax year as shown by the date at the top of Form 1065.
8. Provide each partner with his Form K-1 by the fifteenth day of the fourth month following the date on which the partnership's tax year ends.

Tips & Warnings

• If you are an individual partner, you do not fill out or file K-1 personally. You will need your completed form K-1 from the partnership in order to file your income taxes, just as you would need a W2 or 1099.
• Find out the partnership's deadline for filing and providing you with your copy so that you can determine the tax year to which it will apply. You will not need to file a copy of your Form K-1 with your tax return, since it is already filed by the partnership.