Tax Preparation Checklists To Help You Get Your Tax Documentation In Order

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?

The 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 entity.

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 tax returns.

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

click to print 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 Issue Discount
  • 1099-DIV Dividends and Distributions
  • 1099-INT Interest Income
  • 1099-B Broker & Barter Exchange Proceeds
  • 1099-S Proceeds From Real Estate Transactions
  • Schedule K-1 Investment Partner’s Income and Expenses
  • 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 IRA's
  • 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
  • Rent
  • 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