![]() ![]() For example, if a business earns $100,000 of taxable income and has four equal partners, each partner should receive a K-1 with $25,000 of income on it.K-1s are provided to the IRS with the partnership’s tax return and also to each partner so that they can add the information to their own tax returns.As a result, the partnership must prepare a Schedule K-1 to report each partner’s share of these tax items. Each partner is responsible for filing a tax return reporting their share of income, losses, tax deductions and tax credits that the business reported on the informational 1065 tax form. K-1 Forms for business partnershipsįor businesses that operate as partnerships, it’s the partners who are typically responsible for paying taxes on the business’ income, not the business. These businesses are often referred to as pass-through entities. The Schedule K-1 is the form that reports the amounts that are passed through to each party that has an interest in the entity. This effectively shifts the income tax liability from the entity earning the income to those who have a beneficial interest in it. The United States tax code allows certain types of entities to utilize pass-through taxation.
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