# Schedule K-1 (Form 1065 and 1120-S): Your Share of Business Income

Canonical: https://finbryn.com/us/forms/schedule-k-1

Schedule K-1 is the statement a partnership (Form 1065) or S corporation (Form 1120-S) gives each owner, showing the owner's share of the year's income, deductions and credits. The entity owes it by the date its return is due, March 15, 2027 for calendar-year 2026, and the owner carries the numbers to a personal or business return. An entity that furnishes one late or wrong faces $340 per K-1.

## Form Schedule K-1 (Form 1065 and Form 1120-S) at a glance

- Official name: Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc., and Schedule K-1 (Form 1120-S), Shareholder's Share of Income, Deductions, Credits, etc.
- Who files: A partnership or S corporation prepares a Schedule K-1 for each person who was a partner or shareholder at any time during the tax year, attaches a copy to its return and gives each owner a copy. The owner reports the amounts on the owner's own return.
- Due date: Owed to each owner by the date the entity's return is due: the 15th day of the 3rd month after the tax year ends, which Publication 509 lists as March 15 for a calendar-year entity (Monday, March 15, 2027 for 2026). For a partnership the regulation counts extensions, so Form 7004 moves it to Wednesday, September 15, 2027. Next due: March 15, 2027 (for a calendar-year filer).
- Extension: Form 7004
- Penalty basis: Entity: $340 per Schedule K-1 (and K-3) not furnished on time or incorrect, for statements due in 2026 and 2027, waived for reasonable cause. Intentional disregard: $680 or 10% of the items, whichever is greater (2026), and the greater of $690 or 10% (2027). Owner: an inconsistent treatment without Form 8082 can bring the accuracy-related penalty.
- Who signs: Nobody signs a K-1. The entity return it attaches to is signed by a partner, member or officer, and a paid preparer signs the return with a PTIN.
- Where it goes: The entity attaches a copy to its Form 1065 or Form 1120-S (e-filed or mailed) and gives each owner a copy. Owners keep the K-1 and generally don't file it with their own return.
- How Finbryn fits: Finbryn prepares the workpapers; a credentialed preparer reviews, signs and files the return.
- Official form page (Internal Revenue Service): https://www.irs.gov/instructions/i1065sk1
- Official instructions: https://www.irs.gov/instructions/i1120ssk
- Facts verified 2026-10-19

Finbryn is not the Internal Revenue Service. This page explains the form; the agency's pages above are the source for the form itself.

## Key takeaways

- A K-1 reports your share of the entity's income whether or not you received cash. It isn't a bill or a 1099, and you generally keep it instead of filing it with your return.

- The entity owes your K-1 by the date its return is due: March 15, 2027 for a calendar-year 2026 entity. For a partnership, the regulation counts the extended date, so Form 7004 moves it to September 15, 2027.

- If your K-1 is late, ask the entity for a date, pay a reasonable estimate by April 15, 2027, and consider Form 4868, which extends filing to October 15, 2027 but not payment.

- A K-1 loss is limited in order by your basis, then at-risk rules, then passive activity rules. The K-1 doesn't track your outside basis for you.

- Report K-1 items the way the entity did, or file Form 8082 to explain the difference. An entity that furnishes a K-1 late or wrong faces $340 per statement.

## What is a Schedule K-1?

Schedule K-1 is the statement a pass-through entity gives each owner. A partnership gives Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. An S corporation gives Schedule K-1 (Form 1120-S), Shareholder's Share of Income, Deductions, Credits, etc. Each reports the owner's share of the entity's income, deductions, credits and other items for its tax year. The entity files a copy with the IRS and gives you yours.

The idea that matters most is in both sets of instructions: you may owe tax on your share whether or not the entity paid you anything. A K-1 is therefore not an invoice, a payment record or a 1099. It is a set of numbers to carry onto your own return.

Both sets of instructions say to keep the K-1 for your records and not to file it with your return, with narrow exceptions such as backup withholding. The K-1 may show only the last four digits of your identifying number, although the entity has reported the full number to the IRS. It comes out of the entity's return, explained on the [Form 1065 page](/forms/form-1065) and the [Form 1120-S page](/forms/form-1120-s).

## How does a partnership K-1 differ from an S corporation K-1?

The two schedules look alike, with numbered boxes for each type of income, but the rules behind them differ, and the difference decides what you report and what you can deduct.

| | Schedule K-1 (Form 1065) | Schedule K-1 (Form 1120-S) |
| --- | --- | --- |
| Who gives it | A partnership, to each partner or LLC member | An S corporation, to each shareholder |
| How shares are set | By the partnership agreement; special allocations are allowed | By the shares you held on each day of the year |
| Payments to an owner set without regard to income | Box 4 | Not a K-1 item; an owner who works is paid wages |
| Self-employment | Box 14 reports your self-employment earnings or loss | Your share of S corporation income is not self-employment income |
| Distributions | Box 19 | Box 16, code D, when not reported on Form 1099-DIV |
| Debt and basis | Your share of liabilities is in item K; you work out basis on a worksheet | Box 16 lists items affecting stock basis; Form 7203 works out stock and debt basis |

For a partner, whether self-employment tax applies also depends on whether the partner is a limited partner under section 1402(a)(13), which the instructions flag. If you aren't sure which entity type you own, the K-1's header names the form it came from.

## When do I get my Schedule K-1?

The entity has to give you your K-1 by the date its return is due. IRS Publication 509 lists that date for both partnerships and S corporations as the 15th day of the 3rd month after the end of the tax year. For a calendar-year entity that is March 15, which for the 2026 year is Monday, March 15, 2027.

Extensions change the picture. The partnership regulation, 26 CFR 1.6031(b)-1T(b), says the statement is due on the day the partnership return is required to be filed, determined with regard to extensions. The S corporation instructions word it as on or before the day Form 1120-S is required to be filed.

| Calendar year 2026 | Date |
| --- | --- |
| Entity return due, and the K-1 date Publication 509 lists | Monday, March 15, 2027 |
| Entity return with Form 7004, the partnership regulation date | Wednesday, September 15, 2027 |
| Your own Form 1040 due | Thursday, April 15, 2027 |
| Your own Form 1040 with Form 4868 | Friday, October 15, 2027 |

Read down the table. An entity that extended can legally deliver your K-1 after your own April 15 due date, which is the main reason owners end up chasing one. The date is the entity's obligation, and the penalty for missing it lands on the entity, not on you.

## Why is my Schedule K-1 late, and what can I do?

One common cause is that the entity extended its own return, so its return and your K-1 can lawfully come later. Other causes include books that haven't closed, a K-1 the entity is waiting on from another entity it owns, and an ownership change that forces a split of the year's income. Whatever the cause, your own tax bill doesn't wait.

**What to do while you wait.**

- Ask the entity in writing when you'll get it, and keep the reply.
- Estimate your share and pay by your own due date. The IRS says an extension is only for filing, so tax owed is still due by the April date.
- Request an extension if you won't have it in time. For an individual, Form 4868 gives until October 15 to file, and you estimate the tax you owe on the form. You can also pay online and check the box that the payment is for an extension.
- File when the K-1 arrives. If the final numbers differ from your estimate and you already filed, you may need to amend, which your preparer can tell you.

The entity's side is separate. An entity that doesn't furnish a K-1 when due, or furnishes a wrong one, can be assessed $340 for each K-1, and the IRS can waive it for reasonable cause. That penalty is the entity's. If the entity was required to file a return and hasn't, the instructions have you attach Form 8082 to say so.

## What do I do with my Schedule K-1?

You report the numbers on your own return, and you keep the K-1 itself. The K-1 instructions say where each box goes. These are the common ones for an individual filing a 2025 Form 1040; the 2026 form may move line numbers, so check the instructions for the year you file.

- **Box 1, ordinary business income (loss).** If you materially participated in the business, it goes in column (i) or (k) of Schedule E (Form 1040), line 28. If you didn't, income goes in column (h) and a loss goes through Form 8582 to column (g), after the basis and at-risk limits are applied.
- **Partnership box 4, payments set without regard to partnership income.** Generally not passive; payments for services go in column (k) of Schedule E, line 28.
- **Partnership box 14, self-employment earnings.** Carried to Schedule SE (Form 1040), after the adjustments the instructions list for general partners.
- **Distributions.** They reduce your basis rather than being income on their own. A partner who received property distributions files a separate Form 7217 for each date.

Interest, dividends, capital gains and credits have their own boxes, and the K-1 instructions explain which form picks them up. A corporation, trust or other owner follows its own return's instructions.

## What is basis, and why does it limit my loss?

Basis is your tax investment in the entity, and it caps the losses you can deduct. The instructions put the limits in an order: basis first, then at-risk rules, then passive activity rules, then the excess business loss limit. A loss the K-1 reports can be larger than the loss you are allowed to claim, and the disallowed amount carries forward.

**Partners.** A partner can claim a share of a loss only up to the adjusted basis in the partnership at year end, and has to track that figure, which the regulations call outside basis. The capital account in item L of the K-1 is based on the partnership's books and can't be used to figure basis. The partner instructions include a worksheet, and a partner's share of liabilities from item K flows into it.

**S corporation shareholders.** Stock basis goes up with all income, including tax-exempt income, and down with distributions, nondeductible expenses and losses. Loans you made to the corporation have their own basis. A loan you only co-sign or back for the corporation gives you none until you make a payment on it.

| Illustrative stock basis | Amount |
| --- | --- |
| Basis at the start of the year | $20,000 |
| Add: share of ordinary income, box 1 | $30,000 |
| Add: tax-exempt interest, box 16 code A | $500 |
| Subtract: distributions, box 16 code D | $18,000 |
| Subtract: nondeductible expenses, box 16 code C | $1,500 |
| Basis at year end | $31,000 |

The example assumes no loan basis. If the next year's K-1 shows a $40,000 loss, the shareholder can deduct up to $31,000 against stock basis and carries $9,000 forward, before any at-risk or passive test applies.

## Is a Schedule K-1 the same as a 1099 or a W-2?

No. Each form answers a different question, and mixing them up causes double counting.

- **K-1: your share of the entity's profit.** It is taxed to you whether or not the entity paid it out.
- **Form 1099-NEC or 1099-MISC: a payment you received.** The IRS instructions say these rules don't apply to profits a partnership distributes to its partners that are reportable on Schedule K-1 (Form 1065). For payments made in 2026 the reporting threshold is $2,000, up from $600.
- **Form 1099-DIV: dividends.** The S corporation K-1 doesn't show actual dividend distributions. If the corporation paid dividends of $10 or more in the year, it reports them on Form 1099-DIV, and box 16 code D covers distributions not reported there.
- **Form W-2: wages.** An S corporation must treat payments to an officer as wages to the extent they are reasonable compensation for services. An owner who works in the business can get both a W-2 and a K-1, and the K-1 income is separate from the wages. A partner's pay for services arrives in box 4, not on a W-2.

So a K-1 doesn't tell you how much cash you got, and a 1099 or W-2 doesn't tell you your share of profit. Check the K-1's box numbers against the entity's records and your bank statements.

## What if my Schedule K-1 is wrong or doesn't match the entity's return?

Start by asking the entity for a corrected K-1. Don't change the numbers on your own copy, and make sure the entity sends a copy of the corrected K-1 to the IRS. For an S corporation, if you and the corporation can't agree, file Form 8082.

**Consistency.** An owner generally has to report K-1 items the way the entity treated them on its return. If your treatment is inconsistent, or the entity was required to file a return and hasn't, you file Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment Request, with your return to explain. For a partnership that hasn't elected out of the centralized audit regime, this is a requirement. If you should have filed Form 8082 and didn't, you may face the accuracy-related penalty on top of the tax, and the IRS may assess the resulting deficiency immediately.

**Other events that change a K-1.**

- A decedent's K-1. The executor tells the entity the estate's name and taxpayer number.
- A sale of a partnership interest. In certain exchanges, the partner gives the partnership written notice within 30 days.

The entity's penalty for a wrong K-1 is $340 each, rising to $680 or 10% of the items for statements due in 2026 if the requirement is intentionally disregarded, and to the greater of $690 or 10% for statements due in 2027.

## Where Finbryn fits

Finbryn's role is preparation support on both sides of a K-1.

For the entity, we prepare the workpapers behind the K-1s: the allocation schedule that follows the partnership agreement or the share count, the capital account or shareholder basis and distribution schedules, and a check that the owners' shares add to Schedule K. They go with the return workpapers to a credentialed preparer, who reviews them, signs as the paid preparer and files the entity return after an authorized partner, member or officer signs. Finbryn does not sign or file the return.

For an owner who holds a K-1, we build the Schedule E and Schedule SE workpapers from your books and the K-1 so they tie line for line, and a credentialed preparer reviews, signs and files your personal return. We don't decide for the entity how to allocate income, and a question that needs representation before the IRS goes to an Enrolled Agent or CPA you authorize.

The service pages cover the work: [partnership tax preparation](/services/tax-preparation-support/form-1065-partnership), [S corporation tax preparation](/services/tax-preparation-support/form-1120s-s-corporation) and [individual tax preparation support](/services/tax-preparation-support/form-1040-individual). The guide to [LLC vs S corporation taxes](/guides/llc-vs-s-corp-taxes) explains how the choice of entity changes what the K-1 shows.

## Common mistakes

These mistakes come up on K-1s again and again.

- **Treating the K-1 as cash received.** It shows your share of income, taxed whether or not you were paid. Distributions are a separate box.
- **Filing the K-1 with your return.** The instructions say to keep it unless a specific box tells you otherwise.
- **Deducting a loss without checking basis.** The K-1 reports the entity's loss, not your allowed loss.
- **Mistaking the capital account for basis.** Item L on a partnership K-1 is the partnership's book view.
- **Reading box 1 and ignoring the rest.** Rental income, box 4 payments, credits and other items each have their own boxes and codes.
- **Waiting for a late K-1 with no estimate or extension.** Tax is due on your own date even if the K-1 is not.
- **Editing your copy.** If a number looks wrong, the entity corrects it and sends the corrected K-1 to the IRS.

## What to know for the 2026 filing year

The Partner's and Shareholder's Instructions for Schedule K-1 on IRS.gov are for tax year 2025. A 2026 K-1 is furnished in 2027 on the 2026 form, so read the instructions for the year of your K-1 before you rely on a box number here. Changes the 2025 Form 1065 and K-1 instructions flag:

- **Partnership box 19, distributions,** has additional codes that separate the categories of distribution, and box 20 has a new code for reimbursement of preformation expenditures.
- **S corporation box 17** has a new code BA for domestic research or experimental expenditures, which matters when a shareholder makes a section 59(e) election.
- **Form 7217.** A partner who received property distributions files a separate Form 7217 for each date of receipt, using information from box 19, code C.
- **Penalty amounts.** The $340 per-K-1 figure applies to statements due in 2026 and 2027, and the intentional disregard figure for 2027 comes from Revenue Procedure 2025-32.

## Frequently asked questions

**Q: When do I get my Schedule K-1?**

A: The entity owes it by the date its return is due, the 15th day of the 3rd month, which is Monday, March 15, 2027 for a calendar 2026 year per Publication 509. For a partnership the regulation counts extensions, so Form 7004 moves it to September 15, 2027 (checked 2026-10-19).

**Q: What do I do with Schedule K-1 when I get it?**

A: Keep it and report its numbers on your own return, such as box 1 on Schedule E, line 28 of a 2025 Form 1040. Don't file the K-1 itself unless a box tells you to. Apply your basis, at-risk and passive loss limits before you deduct a loss. State returns have their own rules.

**Q: Why is my Schedule K-1 late, and what can I do?**

A: If the entity filed Form 7004, its return and your K-1 can come as late as September 15, 2027. Ask for a date in writing, pay a reasonable estimate by April 15, 2027 and consider Form 4868, which extends filing to October 15, 2027 but not payment.

**Q: What is basis on a Schedule K-1 and why does it matter?**

A: Basis is your tax investment in the entity, and it caps the loss you can deduct. Partners track outside basis themselves, and the K-1 capital account can't stand in for it. S corporation shareholders adjust stock basis each year by income, distributions and losses, using Form 7203.

**Q: Is a Schedule K-1 the same as a 1099?**

A: No. A K-1 reports your share of the entity's profit, taxed whether or not it was paid. A 1099 reports a payment you received. The 1099-NEC instructions exclude partnership profits reportable on a K-1, and the 1099-NEC threshold is $2,000 for payments in 2026.

**Q: What if my Schedule K-1 is wrong?**

A: Ask the entity for a corrected K-1 and don't change your own copy. Make sure the entity sends the corrected version to the IRS. If you report differently from the entity, file Form 8082 with your return, or you risk the accuracy-related penalty. The entity's penalty is $340 per wrong K-1.

**Q: Where are the current instructions and PDF for Schedule K-1?**

A: The IRS posts the Partner's Instructions at irs.gov/instructions/i1065sk1 and the Shareholder's Instructions at irs.gov/instructions/i1120ssk. On 2026-10-19 both covered tax year 2025. The schedule itself is bundled with Form 1065 or Form 1120-S, so look for the 2026 revision before using a 2026 K-1.

**Q: What is the penalty if an entity gives out a K-1 late?**

A: It is $340 for each K-1 not furnished on time or incorrect, for statements due in 2026 and 2027, and the IRS can waive it for reasonable cause. If the requirement is intentionally disregarded, it is $680 or 10% of the items for 2026 and the greater of $690 or 10% for 2027.

## Sources

1. [IRS, Partner's Instructions for Schedule K-1 (Form 1065) (2025)](https://www.irs.gov/instructions/i1065sk1) (2026-10-19)
2. [IRS, Shareholder's Instructions for Schedule K-1 (Form 1120-S) (2025)](https://www.irs.gov/instructions/i1120ssk) (2026-10-19)
3. [IRS, Instructions for Form 1065 (2025)](https://www.irs.gov/instructions/i1065) (2026-10-19)
4. [IRS, Instructions for Form 1120-S (2025)](https://www.irs.gov/instructions/i1120s) (2026-10-19)
5. [IRS, Publication 509 (2026), Tax Calendars](https://www.irs.gov/publications/p509) (2026-10-19)
6. [eCFR, 26 CFR 1.6031(b)-1T, Statements to partners (temporary)](https://www.ecfr.gov/current/title-26/section-1.6031(b)-1T) (2026-10-19)
7. [IRS, Get an extension to file your tax return](https://www.irs.gov/forms-pubs/extension-of-time-to-file-your-tax-return) (2026-10-19)
8. [IRS, Instructions for Forms 1099-MISC and 1099-NEC](https://www.irs.gov/instructions/i1099mec) (2026-10-19)
9. [IRS, Rev. Proc. 2025-32](https://www.irs.gov/pub/irs-drop/rp-25-32.pdf) (2026-10-19)

## Related forms

- [Form 1065: U.S. Return of Partnership Income](https://finbryn.com/us/forms/form-1065)
- [Form 1120-S: S Corporation Income Tax Return](https://finbryn.com/us/forms/form-1120-s)
- [Form 7004: Application for Automatic Extension of Time to File](https://finbryn.com/us/forms/form-7004)
- [Form 1120: U.S. Corporation Income Tax Return](https://finbryn.com/us/forms/form-1120)
- [Form 941: Employer's Quarterly Federal Tax Return](https://finbryn.com/us/forms/form-941)

## Related services

- [Partnership tax preparation support](https://finbryn.com/us/services/tax-preparation-support/form-1065-partnership)
- [S corporation tax preparation support](https://finbryn.com/us/services/tax-preparation-support/form-1120s-s-corporation)
- [Individual income tax preparation support](https://finbryn.com/us/services/tax-preparation-support/form-1040-individual)

Reviewed October 2026

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