Schedule K-1 and 1099 Forms are tax returns for various income types. There are many 1099 forms. The income source will determine which 1099 you receive. K-1 is available to business partners or owners of a business.
1099 Vs. Schedule K-1
There are many types of 1099s. These are used to get income from sources other than an employer. Here are a few 1099 examples:
- 1099-INT — Interest Income
- 1099-DIV — Dividends & Distributions
- 1099-MISC — Miscellaneous Income
- 1099-NEC — Compensation for Non-Employees
Most likely, you have received a 1099 INT or 1099 DIV. These usually come from your broker or financial institution. If they have earned more than $600 from a contractor, a 1099-MISC will likely be issued to freelancers.
The payer must receive 1099s by January 31. In some cases, by February 15.
A K-1 form is generated by a pass-through entity, which is generally a business. It shows income and losses for owners or partners of the pass-through entity. The income is calculated based on the equity contribution of the partner or the agreement made with the pass-through entity.
A K-1 will be issued to business owners and partners. For form the 1120S, an S Corp will use, while Form 1065 will be used by a partnership. The K-1 should be received by taxpayers no later than March 15. It is usually the final form a taxpayer will receive. A K-1 is sent to the taxpayer regardless of whether they are a general partner or a limited partner.
1099 Form Overview
There are many 1099 forms, but we will only be focusing on the 1099-MISC. There are four 1099-MISC forms. Each copy is unique, and copies of the 1099-MISC forms are available as duplicates.
- Copy 1 — For the recipient’s state tax department
- Copy B — sent directly to the recipient
- Copy 2 — to be used in the recipient’s state tax return
- Copy C — Record-keeping for the payer
Like most 1099s, it is a simple form. The form includes the following fields:
- Payer and recipient’s TIN
- Name and address of the recipient and payer
- Types of income
- State taxes
- The federal government holds taxes
Brokerage 1099s provide detailed information as different security incomes may be taxed differently.
Schedule K-1 Form Overview
Schedule K-1 is more than 1099, divided into three main parts.
- Part 1 — Information about the Partnership (A–D)
- Part 2 — Information about the Partner (E.N)
- Part 3 — The Partner’s Share in Current Year Income, Deductions, and Credits (1-23)
Part 1 contains the address and EIN of the partnership. Part 1 is about an entity. Part 2 is about an individual. Part 2 contains identifying information, the percentage of profit/loss, liabilities, type and withdrawals, as well as contributions and contributions to the partnership.
Part 3 provides an overview of the partner’s income, losses, and deductions.
To report income not received from an employer, both the Schedule K-1 and 1099 are required. These supplement forms add income or losses to an individual’s income tax filing.