A Schedule K-1 is the IRS form that tells you your share of a partnership's, S corporation's or trust's income, deductions and credits for the year. You don't usually file it with your return; you use the figures on it to fill in your own return and keep the K-1 for your records.
Getting one for the first time is confusing, mainly because it can show income you never received. That part trips people up, so it's where I'll start.
Why you can owe tax on a K-1 you weren't paid
The IRS partner's instructions are blunt about it: although the partnership generally isn't subject to income tax, you may be liable for tax on your share of the partnership income, whether or not it was distributed. If the business kept its profit in the bank to fund growth, your share is still taxable to you that year.
That's the insight to build your planning around. If you're a partner in a profitable business that doesn't pay out, set cash aside for the tax on your share, or agree a tax distribution with your partners in your operating agreement.
Which K-1 have you got?
| Version | Who issues it | Who receives it |
|---|---|---|
| Schedule K-1 (Form 1065) | A partnership, including an LLC taxed as one | Each partner or LLC member |
| Schedule K-1 (Form 1120-S) | An S corporation | Each shareholder |
| Schedule K-1 (Form 1041) | An estate or trust | Each beneficiary |
The boxes differ between the three, so always read the instructions for the version you hold. The rest of this page follows the partnership version, which is the one LLC co-owners receive.
What the main boxes on a partnership K-1 mean
| Box | What it shows |
|---|---|
| Box 1 | Your share of ordinary business income or loss |
| Boxes 2 and 3 | Net rental real estate income and other net rental income |
| Boxes 4a to 4c | Guaranteed payments for services, for capital, and the total |
| Boxes 5 and 6 | Interest and dividend income |
| Box 14 | Self-employment earnings or loss |
| Box 19 | Distributions you received |
Box 14 matters for self-employment tax. Whether you're treated as a limited partner for that purpose depends on the tax rules, not just on what your agreement calls you, which is a point the IRS instructions spell out.
What to do when your K-1 arrives
- Check the basics: the partnership's EIN, your name and the ownership percentages in Part II.
- Match each box to the line the partner's instructions point you to on your own return.
- Don't attach the K-1 to your return unless the instructions tell you to for a specific item.
- Check your basis. The IRS says the loss and deductions you can claim may be less than the K-1 shows, and it's your job, not the partnership's, to track the limits.
- Keep it with your records.
Two details on the form that worry people
First, your identifying number. The IRS says a K-1 may show only the last four digits of your Social Security number for your protection, while the partnership has still reported your complete number to the IRS. A masked number isn't an error.
Second, the gap between the K-1 and what you can claim. A loss in box 1 doesn't automatically become a deduction on your return. Basis, at-risk and passive activity limits can all cut it down, and the partner's instructions include a basis worksheet for exactly this reason. S corporation shareholders get a similar warning: the IRS points them to Form 7203 to work out their stock and debt basis limits.
If the K-1 looks wrong
Don't change anything on your copy. The IRS tells partners to notify the partnership and ask for a corrected Schedule K-1, and to make sure the partnership sends the corrected copy to the IRS too.
If you decide to report an item differently from the way the partnership did, you have to file Form 8082, Notice of Inconsistent Treatment, with your return to explain it. Skipping that can bring an accuracy-related penalty on top of any extra tax.
When should a partnership K-1 arrive?
The IRS says a K-1 must be provided to each partner on or before the day the partnership return is required to be filed. That's the 15th day of the 3rd month after its year ends, so 15 March for a calendar-year partnership, unless it extends. If the partnership files Form 7004, its K-1s can arrive later, so build that into your own filing plans. As of October 2026, the partnership faces a $340 penalty for each K-1 it fails to furnish on time or furnishes with wrong information, so it's reasonable to chase.
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New to partnership tax? My guide to saving on business taxes covers the planning side, and LLC versus sole proprietorship explains why your structure decides whether you get a K-1 at all.
My verdict
Treat a K-1 as an instruction sheet for your own return, not a form to send in. The two things that cost people are paying no attention to undistributed profit and quietly changing figures they think are wrong. Plan for the tax on your share, ask for corrections in writing, and file Form 8082 if you really must disagree.
Frequently asked questions
Do I file Schedule K-1 with my tax return?
Usually not. The IRS says to keep it for your records and use its figures on your return, unless the instructions specifically require you to attach it for a particular item.
Why am I taxed on K-1 income I didn't receive?
Partners are taxed on their share of partnership income whether or not it was distributed, so profit kept in the business is still taxable to you.
Who sends a Schedule K-1?
Partnerships send them to partners, S corporations to shareholders, and estates or trusts to beneficiaries.
What if my K-1 is wrong?
Ask the partnership for a corrected K-1 and don't change your copy. If you report an item differently, file Form 8082 to explain the inconsistency.
When are partnership K-1s due?
By the due date of Form 1065, 15 March for a calendar-year partnership, unless the partnership has extended its return.
Is K-1 income subject to self-employment tax?
It can be. Box 14 shows self-employment earnings, and whether a partner counts as a limited partner for that purpose depends on the tax rules.
