The Schedule K-1 is an IRS tax form issued annually to report interest in a partnership that includes the partner’s earnings, losses, deductions, and credits. The K-1 is similar to the 1099 form used to report investment income. The Schedule K-1 is used by S corporations, companies of under 100 stockholders that are taxed as partnerships, trusts, estates, and exchange-traded funds. 

The challenge of the Schedule K-1

Schedule K-1s can be difficult to work with. Not as simple as the better known 1099, K-1s can make completing your taxes complicated. Various complexities make it challenging to determine what (if anything) you need to report from a K-1.

A further complication is timing. Some partnerships don’t send them until just before normal individual tax-filing deadlines. This can mean filing an extension is necessary. (particularly for investors involved in Master Limited Partnerships (MLPs).

Financial professionals and accounts sometimes view Schedule K-1s differently. Investments requiring K-1s can be beneficial, but your accountant may not enjoy the  extra diligence necessary. To ensure you have the best investments with the smoothest tax filing possible, make sure your tax and financial professionals work together on your behalf.