How to Report K-1 Amounts on Taxes

Partnership income must be recorded on tax forms.

If you invest in a partnership, at the end of the year you should receive a Schedule K-1 from the partnership administrator. Although the form can seem complex, it is simply a listing of your share of the partnership's income, deductions and credits. As you would with any other year-end tax form, such as the more commonly issued Form 1099, you must transfer these amounts to your Federal Form 1040 according to specific Internal Revenue Service (IRS) rules.


Step 1

Gather your K-1 forms. Many partnership investors own interests in more than one partnership, and it is important that you file information for all of your partnership investments. Make sure you receive a K-1 for each partnership investment, and be prepared to be patient. While each partnership is required to send investors year-end K-1s, due to the complexity of partnership tax returns, individual investors often do not receive their K-1s until March, unlike 1099s and W-2 Forms, which often arrive in late January.

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Step 2

Read the IRS filing instructions for Schedule K-1, also known as Form 1065. Because a K-1 can list many different types of entries, such as capital gains and losses, interest and dividend payments, royalties and section 179 deductions, you may have to enter information on different schedules of your Form 1040. The IRS filing instructions can help you sort out where to properly enter each amount, and it helps to read through the instructions before you begin.


Step 3

Transfer K-1 amounts to the appropriate schedules and lines of Form 1040. While K-1s can be extremely complex, for most limited partners K-1s usually only list traditional entries, such as dividend and interest payments and capital gains and losses. These amounts can be treated as investments in any other capital investment, such as stocks and mutual funds. For example, any capital gains listed on your K-1 can be transferred to your Schedule D, "Capital Gains and Losses," exactly as if you had bought and sold a stock or other capital investment. Similarly, any dividends generated by your partnership can be reported on line 9 of your Form 1040, as you would with any stock or mutual fund dividends. Occasionally, K-1s do list more obscure entries that may have to be reported on Schedule E, Form 4562, or other lesser-used tax forms, in which case you should either consult a tax adviser or strictly adhere to the IRS instructions for Schedule K-1.