What is a Schedule K-1 tax form?

Schedule K-1 is an IRS tax form used by partnerships to report income, deductions, and credit of their partners. The Canadian equivalent of Schedule K-1 is the T5013. K-1 splits partnership earnings so that earnings can be taxed at an individual income tax rate instead of the corporate tax rate. How Does Schedule K-1 Work?

How does a partnership file a K-1 tax return?

K-1s are sent to the IRS with the partnership’s tax return (Form 1065) and also to each partner so that they can add the information to their own tax returns. S-corporations file an annual tax return using Form 1120-S. They include Schedule K-1 information about each shareholder’s share of income, losses, deductions, and credits.

Does a corporation file a K-1 form?

When the corporation files its annual tax return (Form 1120-S), it also files the K-1 information about each shareholder’s share of income, losses, deductions, and credits. Estates and trusts issue a K-1 form to beneficiaries so that those beneficiaries may include the income that they’ve received on their personal income tax returns.