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Schedule K-1 (Partner’s Share of Income, Deductions, Credits, etc.)

Definition:
Schedule K-1 (Form 1065) is a supplemental IRS tax form used to report each partner’s or member’s share of income, deductions, credits, and other financial details from a partnership or Multi-Member LLC (MMLLC) that has filed Form 1065.

Each partner receives a personalized K-1 that breaks down their portion of:

  • Business income and losses
  • Capital gains or losses
  • Deductions and tax credits
  • Distributions and guaranteed payments

The partner then uses this K-1 to report their share of the activity on their individual or business tax return (e.g., Form 1040 or Form 1040-NR).

Why is it important?
Schedule K-1 ensures that pass-through taxation is properly accounted for and attributed to each partner. The IRS uses it to match income reporting between the business and its owners. Non-filing or errors may trigger audits or penalties.

Who is it for?

  • U.S. and foreign members of Multi-Member LLCs (MMLLCs)
  • Partners in U.S. partnerships
  • Any business entity filing Form 1065
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