A K-1 is a tax form that reports your share of income from a partnership, S corporation, or trust

The K-1 form (officially Schedule K-1) is a document that shows how much income, loss, deduction, or credit you received from a business entity that does not pay taxes itself. Instead of the entity paying taxes, the income passes through to the owners or beneficiaries, who report it on their own tax returns. You receive a K-1 if you own part of a partnership, are a shareholder in an S corporation, or are a beneficiary of a trust or estate.

The entity that issues the K-1 also files its own tax return (Form 1065 for partnerships, Form 1120-S for S corporations, Form 1041 for trusts and estates). That return includes a summary of all K-1s issued. The IRS uses this to cross-check your individual return, so the numbers on your K-1 must match what you report.

Key Takeaways

  • You receive a K-1 when you own a stake in a partnership, S corporation, trust, or estate, and that entity passes its income to you rather than paying taxes itself.
  • The K-1 shows your specific share of income, loss, deductions, and credits — not the total for the whole business.
  • You must report the K-1 income on your individual tax return (Form 1040) even if you did not receive cash, because the business may have retained earnings.
  • The entity must send you the K-1 by March 15 (or later if an extension was filed), and you need it before you file your own return.
  • If the numbers on your K-1 do not match what the entity reported to the IRS, the IRS will contact you to reconcile the difference.

Who issues K-1 forms and when you receive them

A K-1 is issued by the business entity itself, not by the IRS. The entity's accountant or tax preparer prepares the K-1 based on the entity's financial records. The entity must send you a copy by March 15 of the year after the tax year ends — so for 2023 income, you should receive it by March 15, 2024. If the entity filed an extension on its own return, the deadline for sending K-1s extends to the same date as the entity's return deadline.

You need the K-1 before you file your own return because you cannot complete your tax return without the numbers from it. If you do not receive a K-1 by early April, contact the entity directly. If it still does not arrive, you can file your return using a reasonable estimate and then amend it once you have the actual K-1, though this creates extra work and may trigger IRS notices.

What information appears on a K-1

A K-1 has multiple boxes, each reporting a different type of income or deduction. The most common boxes are ordinary business income or loss (Box 1a), net rental real estate income or loss (Box 2), and various types of deductions and credits. The form also shows your ownership percentage and the entity's identification number.

Each box on the K-1 corresponds to a specific line on your Form 1040 or a supporting schedule. For example, Box 1a income goes on Schedule E (if it is rental income) or is combined with other business income. Capital gains, charitable contributions, and foreign tax credits each have their own boxes and their own places on your return. Your tax software or preparer will know where each number goes.

Reporting K-1 income on your tax return

You report K-1 income on your individual Form 1040, usually on Schedule E (Supplemental Income and Loss) or Schedule C (Profit or Loss from Business), depending on the type of entity and the type of income. The exact schedule depends on whether the K-1 is from a partnership, S corporation, or trust, and what kind of income it represents.

One important point: you must report K-1 income even if you did not receive any cash from the entity. Partnerships and S corporations often retain earnings to reinvest in the business. You still owe tax on your share of that retained income, even though the money stayed in the business. This is called phantom income, and it is a common source of confusion for new business owners.

Self-employment tax and K-1 income

K-1 income from a partnership is generally subject to self-employment tax, which means you pay both the employee and employer portions of Social Security and Medicare tax. K-1 income from an S corporation is usually not subject to self-employment tax on the business income itself, though S corporation shareholders who work in the business must pay themselves a reasonable salary, which is subject to payroll tax.

The K-1 will indicate which portions of your income are subject to self-employment tax. If you are unsure whether a particular line item is subject to self-employment tax, ask the entity's accountant or your own tax preparer before filing.

What to do if your K-1 has an error

If you notice an error on your K-1 — a wrong amount, a box that should be blank but is not, or information that does not match what you know about the entity — contact the entity immediately and ask for a corrected K-1. The entity can issue an amended K-1 (marked as "Amended" on the form) and send it to you and the IRS.

If you file your return before receiving a corrected K-1, you will need to file an amended return (Form 1040-X) once the corrected K-1 arrives. Do not guess or leave the K-1 income off your return. The IRS will receive a copy of the K-1 and will match it against your return. Mismatches trigger automated notices and can delay your refund or result in additional tax and penalties.

K-1 forms from trusts and estates

If you are a beneficiary of a trust or estate, you may receive a K-1 (Schedule K-1, Form 1041) showing your share of the trust's or estate's income, deductions, and credits. The rules are similar to partnership K-1s, but the reporting is slightly different. Trust and estate K-1 income is reported on Schedule E of your Form 1040.

Trusts and estates have their own tax brackets and rates, which are much steeper than individual brackets. Income retained by the trust is taxed at the trust's rate; income distributed to beneficiaries is taxed at the beneficiary's rate. The K-1 will show how much income was distributed to you versus retained by the trust, and your tax liability depends on which category each item falls into.

Frequently Asked Questions

Do I have to report K-1 income if I did not receive any money?

Yes. Partnerships and S corporations often retain earnings in the business. You owe tax on your share of the income whether or not cash was distributed to you. This is called phantom income. The K-1 will show both the income allocated to you and any distributions you actually received.

What happens if the entity does not send me a K-1?

Contact the entity's accountant or manager immediately. If it still does not arrive by mid-April, you can file your return using a reasonable estimate and amend it later, but this creates extra work. The IRS will receive the K-1 from the entity and will notice if your return does not match it.

Can I file my tax return before I receive the K-1?

You can file late (after the K-1 arrives) or file early using an estimate and amend later, but neither is ideal. The best approach is to wait for the K-1. If you need a refund urgently, ask the entity for an early copy or a draft version you can use to file on time.

Is K-1 income subject to self-employment tax?

K-1 income from a partnership is generally subject to self-employment tax. K-1 income from an S corporation is usually not, though S corporation owners who work in the business must pay themselves a reasonable W-2 salary, which is subject to payroll tax. The K-1 will indicate which portions are subject to self-employment tax.

What if my K-1 does not match what I think I should owe?

Ask the entity's accountant to explain the numbers. K-1 income includes not just cash distributions but also retained earnings, deductions you may not have known about, and adjustments for depreciation or other items. The accountant can walk you through each box and explain why the amount is what it is.