Schedule K1 / Form 1065
Tax Preparation Checklist
The Schedule K-1 (Form
1065) Department of the Treasury Internal Revenue Service, Serves the Purpose of Reporting
an Investment Partner’s Share of Income, Deductions, Credits, etc.
What is Schedule K1 Tax Form?
Schedule K-1 tax document is used when reporting investments in partnership interests. It
serves a similar purpose as Form 1099 for tax reporting.
This allows certain types of entities to utilize pass-through taxation which shifts income
tax liability from the entity onto its beneficiaries. Beneficiaries use Schedule K-1 to
report income and expenses they are responsible for from their share of interest in the
Schedule K-1 Reporting
Businesses prepare a Schedule K-1 for reporting each partner’s share of income and expenses.
These Schedule K-1's are somewhat different based on whether they come from a partnership,
trust, or S corporation.
Using a K-1 Form in Business Partnerships
Businesses operating as partnerships pass income tax liabilities on to its partners who
are then responsible for paying taxes on their share of the business income. Each partner
reports their share of income, losses, tax credits and deductions on their individual tax
return as the business reports on tax form 1065.
Using a Schedule K-1 Form for S Corporations
S Corporations are required to file annual tax returns using Form 1120S. They must also
provide Schedule K-1 tax forms to reports each shareholder’s share of income, losses, credits
and deductions. Shareholders use this information for their individual tax returns.
Using K-1 Forms for Trust & Estate Beneficiaries
Trusts and estates file their tax returns using Form 1041. Some trusts pay income taxes
on earnings, while others pass it on to the beneficiaries. If passed on, the beneficiaries
receive a K-1 form showing their share of the income and expenses to report on their personal
When a distribution is paid to a beneficiary, the trust or estate reports a deduction
on tax form 1041 so that income is only taxed once.
Schedule K1 Form 1065 Tax Prep Checklist
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schedule k1 form 1065 tax preparation checklist
Investors can benefit from dividends and capital appreciation, as well as tax advantages,
depending on the type of investment income received.
Save important tax documents as you receive them, including:
- Partnership agreement
- List of partners and their partnership type (general or limited).
- Information on the distributions of shares or money to partners
- Allocation of income/loss to partners
- 1099-OID Original
1099-DIV Dividends and Distributions
- 1099-B Broker & Barter
1099-S Proceeds From Real Estate Transactions
- Schedule K-1 Investment Partner’s Income
- Keep your K1 tax documents organized, label a folder or shoe box
- Know what to expect, pay attention to tax law changes
- Review current capital gains and dividend rates
- Support information for gains and losses:
- acquisition date, cost basis, settlement statements
- Review Net Investment Tax and ACA Tax liability
- Investment income more than $200,000 if single, or $250,000 if married filing
jointly, may require additional taxes
- Determine if capital losses can offset investment income
- Investment advisory fees, tax prep fees, and state and local income taxes
may reduce your income enough to avoid the net investment tax
- Review contribution eligibility to a Tax-Advantaged Account
- Review RMD (Required Minimum Distribution) withdrawal requirements from inherited
- P&L (profit and loss, or income) statement,
- corporate income, specific sources of revenue
- deductible expenses
- Partnership, Employer ID number, business code (NAICS code)
- Date the partnership was started
- Total gross receipts, returns and allowances
- Accounting method used by the partnership
- Cost of goods sold
Information on Partnership Expenses
- Salaries and wages of employees, minus employment credits
- Guaranteed payments to partners
- Repairs and maintenance expenses
- Taxes and licenses
- Interest paid
- Depreciation calculation for the year
- Retirement plans
- Employee benefit programs
Information on your business assets
- business vehicles, etc. for depreciation purposes