1099 Schedule K-1 Forms What you need to know

1099 Schedule K-1 Forms: What you need to know

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.