Q:

What is a Schedule K-1 tax form?

A:

Quick Answer

The Schedule K-1 tax form declares the amount of money passed from the entity that earned the income to the parties that have interest in the entity, and it also passes the tax liability to those parties, explains TurboTax. The definition varies slightly for trusts, partnerships and S corporations.

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Full Answer

Information provided on a Schedule K-1 includes type of income and any deductions or losses of the business, notes TurboTax. For partnerships, a Schedule K-1 spreads the tax liability among the partners of the business. Each partner declares his share of the income by individually filing a 1065 tax form. For S corporations, the shareholders share the tax liability. In this case, the S corporation files the Schedule K-1, but the shareholders use the information on it to file tax returns individually. For trusts and estates, the beneficiaries are responsible for any taxes.

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