Schedule K-1 is used to distribute the net profit/loss to shareholders or partners based upon the percentage of stock or how the partnership agreement reads. Also, if a trust didn't pay the income tax on their earnings it may be passed through to the beneficiaries on a Schedule K-1.
To enter amounts from Schedule K-1 into an individual tax return, from the Main Menu of the Tax Return (Form 1040) select:
- Income
- Rents, Royalties, Entities (Sch E, K-1, 4835, 8582)
- K-1 Input
- New or Pull. Select Pull to either pull the K-1 from the business program if you also prepared the business return or pull last year's heading information forward if you prepared last year's tax return.
- For a new K-1 entry select the entity it relates to, either Form 1065, Form 1120S, or Form 1041. The Schedule K-1 entry screens are designed to follow the Schedule K-1 for each entity.
- Fill in the company information and answer the questions on the screen
- Enter the information from the Schedule K-1. The line numbers on the Schedule K-1 entry screen correspond to the box numbers on the paper Schedule K-1.
Be sure to correctly designate Passive or Non-passive income under Ordinary Income or Loss from Trade or Business Activities.
- Passive Income is income from business activities in which the taxpayer does not materially participate, and all rental activities (except those of qualified real estate professionals).
- Non-Passive Income is active income, such as wages, tips, and profits from your business that you materially participate in.
The amount in some boxes in the Schedule K-1 screen can potentially go to more than one form or schedule, so an amount in these boxes does not flow anywhere beyond the Schedule K-1 entry screen. You will be told this on-screen and will need to use the instructions to determine the correct form or schedule the amount should be entered on and manually complete that form.
NOTE: This is a guide on entering a Schedule K-1 into the TaxSlayer Pro program. This is not intended as tax advice.
Additional Information:
Schedule K-1 (Form 1065) Overview - For information and links on entering specific items on the Schedule K-1 (Form 1065) into Form 1040 in TaxSlayer Pro.
Schedule K-1 (Form 1120S) Overview - For information and links on entering specific items on the Schedule K-1 (Form 1120S) into Form 1040 in TaxSlayer Pro.
Schedule K-1 (Form 1041) Overview - For information and links on entering specific items on the Schedule K-1 (Form 1041) into Form 1040 in TaxSlayer Pro.
IRS: Instructions for Form 1065 - Partner's Share of Income, Deductions, Credits, etc.
IRS: Form 1120-S - Schedule K-1
IRS: Instructions for Form 1120-S - Shareholder's Share of Income, Deductions, Credits, etc.
IRS: Instructions for Form 1041 - Beneficiary Filing Form 1040
