IRS Schedule K-1 is a tax form used to report a person’s share of income, deductions, credits, and other items from a partnership, S corporation, trust, or estate. This form is used to report the income and other tax items of a partner or shareholder, rather than the partnership or S corporation itself.

A partnership, S corporation, trust, or estate must file Schedule K-1 for each partner, shareholder, or beneficiary, respectively, who received a share of the entity’s income, deductions, credits, or other items during the tax year. The entity must furnish a copy of the Schedule K-1 to each partner, shareholder, or beneficiary by the due date of the entity’s tax return, typically March 15th for partnerships and S corporations and April 15th for trusts and estates.

Schedule K-1 includes the following information:

• The name, address, and taxpayer identification number (TIN) of the partner, shareholder, or beneficiary
• The partner’s, shareholder’s, or beneficiary’s share of income, deductions, credits, and other items
• The partner’s, shareholder’s, or beneficiary’s share of the entity’s liabilities
• Any distributions made to the partner, shareholder, or beneficiary during the tax year
• Any foreign transactions or foreign accounts that the entity may have

It’s important to note that Schedule K-1 is not a standalone tax form and must be attached to the partner’s, shareholder’s, or beneficiary’s individual tax return. The information reported on Schedule K-1 is used to compute the partner’s, shareholder’s, or beneficiary’s share of the entity’s income, deductions, credits, and other items. It must be reported on their individual tax return.

For example, if a person is a partner in a partnership, the partnership must file a Schedule K-1 for that person, which shows the person’s share of the partnership’s income, deductions, and credits. The person must then report this information on their individual tax return.

Additionally, the entity must report the information of the Schedule K-1 on Form 1065 for partnerships, Form 1120S for S corporations, and Form 1041 for trusts and estates.

It is also important to note that if a partner, shareholder, or beneficiary does not receive a Schedule K-1 by the due date of the entity’s tax return, they should contact the entity to inquire about the form. If the form is not received by the due date of the individual’s tax return, the individual may be subject to penalties and interest for failure to report the information on their tax return.

In summary, IRS Schedule K-1 is a tax form used to report a person’s share of income, deductions, credits, and other items from a partnership, S corporation, trust, or estate. The entity (partnership, S corporation, trust, or estate) must file Schedule K-1 for each partner, shareholder, or beneficiary who received a share of the entity’s income, deductions, credits, or other items during the tax year. The entity must furnish a copy of the Schedule K-1 to each partner, shareholder, or beneficiary by the due date of the entity’s tax return. The information reported on Schedule K-1 is used to compute the partner’s, shareholder’s, or beneficiary’s share of the entity’s income, deductions, credits, and other items. It must be reported on their individual tax return. The entity is also required to report the information of the Schedule K-1 on Form 1065 for partnerships, Form 1120S for S corporations, and Form 1041 for trusts and estates.