How to Report K-1 Amounts on Taxes

Reporting your K-1 income doesn't require a stack of paperwork.

Reporting your K-1 income doesn't require a stack of paperwork.

Income and losses you receive from an S corporation or business partnership, as well as payments and assets you received as a beneficiary of an estate or trust, are reported on Schedule K-1. You’ll also receive a K-1 if you invested in limited partnership funds or commodity future exchange-traded funds. Schedule K-1 reports income and deductions, similar to the W-2 form that employees receive by the end of January. However, unlike W-2 forms, companies, firms and trustees have until March 15 to issue K-1 forms. While the information on a schedule K-1 is fairly straightforward, it’s important to make sure you are reporting it accurately to avoid costly mistakes.

Report active income from box 1 on line 28, column J, of Schedule E. Report any loss of active income in column H. Active income, also referred to as “non-passive” income by the IRS, includes payments you received by actually participating in a business. This includes earnings from providing goods and services, as well as salaries, commissions and bonuses.

Enter passive income from box 1 on line 28, column G, of Schedule E. Report passive income losses in column F. You earn passive income from a business without effort on your part, and you do not have to be directly involved in the business’s activities to receive it. Do not include income from dividends, which is reported separately.

Place short-term capital gains and losses from box 8 on line 5 of Schedule D. Enter long-term capital gains and losses from box 9a on line 12. Short-term capital gains refer to income you received from the increase in value of an asset you held for less than one year. Long-term gains include income from assets you held for a year or longer.

Report qualified dividends from box 6b on line 9b of Form 1040. Qualified dividends only apply to stock that you held for at least 60 days and that was issued by a U.S.-based company or a foreign company that trades on the U.S. stock market. Ordinary dividends, found in box 6a, do not meet these criteria. Place these dividends on line 9a of Form 1040.

Enter deductions, such as the Section 179 depreciation deduction in box 12 or the depletion allowance for oil, gas, mineral and timber-related limited partnerships reported in box 13, on Schedule E, Supplemental Income and Loss. Credits reported in box 15, such as low-income rental property, biofuel and job-creating credits, are recorded on their own corresponding forms. You must follow the specific instructions for that credit to report the correct amounts in the right place on your tax return.

About the Author

Lauren Treadwell studied finance at Western Governors University and is an associate of the National Association of Personal Financial Advisors. Treadwell provides content to a number of prominent organizations, including Wise Bread, FindLaw and Discover Financial. As a high school student, she offered financial literacy lessons to fellow students.

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