K-1's (for Beginners!)

If you're the beneficiary of a trust or an estate, a partner in a partnership, or a shareholder in a S-Corporation, you're probably gotten one of these forms and wondered what is is and how it affects your taxes. This very introductory video goes over what K-1's are, the three types of K-1's and how they differ, where the numbers on the Schedule come from, and where those figures go on your tax return.
Additional videos are forthcoming on pass-thru entities and their associated K-1's in more detail.
0:00 Introduction
0:37 Pass-thru entities and K-1's
2:50 Where the numbers come from on your K-1
4:18 Reporting the figures from the K-1 on your tax return
6:10 Conclusion
To learn more about types of business organization, click here: kzbin.info/www/bejne/i3TWdHyurqqfmac
For more information on S-Corporations, click here: kzbin.info/www/bejne/d6nHqH-MmJitbKs
Additional Resources and Information:
IRS Schedules K-1:
For estates and trusts: www.irs.gov/pub/irs-pdf/f1041sk1.pdf
For partnerships: www.irs.gov/pub/irs-pdf/f1065sk1.pdf
For S-Corporations: www.irs.gov/pub/irs-pdf/f1120ssk.pdf
Instructions for Schedules K-1:
For estates and trusts: www.irs.gov/pub/irs-pdf/i1041sk1.pdf
For partnerships: www.irs.gov/pub/irs-pdf/i1065sk1.pdf
For S-Corporations: www.irs.gov/pub/irs-pdf/i1120ssk.pdf
IRS Form 1041: "U. S. Income Tax Return for Estates and Trusts": www.irs.gov/pub/irs-pdf/f1041.pdf
IRS Form 1065: "U.S. Return of Partnership Income": www.irs.gov/pub/irs-pdf/f1065.pdf
IRS Form 1120-S: "U.S. Income Tax Return for an S-Corporation": www.irs.gov/pub/irs-pdf/f1120s.pdf
Investopedia: "Schedule K-1 Tax Federal Tax Form: What it is": www.investopedia.com/terms/s/schedule-k-1.asp
The Tax Geek on The Site Formerly Known as Twitter: www.twitter.com@taxgeekusa
The Tax Geek on Reddit: www.reddit.com/r/askataxgeek
Image/Video Sources:
Storyblocks.com
Pexels.com
*No artificial intelligence was used to research, write, animate, voice, or edit this video*
Intro Music: "Bluesy Vibes" - Doug Maxwell - KZbin Creator Music
Outro Music: "Modern Attempt" - Track Tribe under license from KZbin Creator Music
DISCLAIMER: This video is for educational and informational purposes only. It is not intended to render tax advice or financial advice for individual situations. If you have questions regarding your particular situation, please consult with a qualified tax or financial professional.

[@Kelsthegem]

Thank you so much. Your channel definitely lives up to its name. OVERSIMPLIFIED, just what I needed.

[@TheTaxGeek]

You are so welcome!

[@teresarivera8098]

This is probably one of the best videos I have seen! Thanks so much for sharing :)

[@TheTaxGeek]

Wow, thank you!

[@fromjaxflorida]

New sub here. I'm learning so much from your videos than reading pages and pages from the book. It's giving me a migraine. . Your videos are easier to understand and the sample scenarios help as well.

[@TheTaxGeek]

Thanks for subbing! And thanks for the kind words. Good luck with your studies.

[@EverydayDiana]

Thank you, thank you, thank you! This is my first year filing for an S-Corp and as its shareholder.

[@TheTaxGeek]

You're very welcome. Good luck with your new enterprise.

[@sriran]

Great explanation! Thank you!

[@TheTaxGeek]

You’re welcome!

[@ELconomics101]

Let's go coach!!

[@hitomi2065]

This is what I needed, thank you so much!

[@TheTaxGeek]

You're so welcome!

[@jerrymaushard3835]

Great explanation as usual.

[@TheTaxGeek]

Thanks! I was really concerned I was going too quickly and glossing over too much. More detail will be forthcoming.

[@miguelcubero3440]

Love it ❤

[@miguelcubero3440]

Would be very curious to see a general explanation for all the additional schedules on the 1120, such as K, M1-3, C, L etc.. Great videos by the way! ❤

[@TheTaxGeek]

That's a great idea, and I will be pursuing it. I think that many small businesspeople are presented with their 1120s by their accountants, without understanding much about anything other than what's on the first page.

[@nyctom08]

First time receiving one of these headaches. I'm not sure if I need to file it, there dividends reported on it but the accompanying letter which came with it states "The transaction schedule is not filed with or required by the United States Internal Revenue Service". Same thing on the back of the K-1.

[@TheTaxGeek]

The transaction schedule (in other words, the individual dividend transactions) are not reported to the IRS, but the total amount of the dividends are.

[@nyctom08]

@@TheTaxGeek thank you

[@musawwirrizvi8409]

Can you give an overview on K-3’s?

[@TheTaxGeek]

Yes I can. Look for it in the not-too-distant future.

[@monicavega2090]

Amazing video! I have a 2 person partnership and got a 1099-MISC from my online course with income classified under box 2 royalties under my LLC. I was unsure were to put it on the 1065 and K1. Is it box 7 on both?

[@TheTaxGeek]

Royalties are entered directly on line 7 of Schedule K of the 1065 (page5). They are not shown as income on page 1. They are stated separately on line 7 of the K-1 and are not subject to self-employment tax.

[@monicavega2090]

Thank you ! I also hear you can put the royalties as regular business income if it's from the "ordinary course of the operation of business". But if it's an "investment" it should be under line 7. Not sure if my udemy couse royalties is regular income or investment income. Does investment income get taxed at a higher rate ? 🤔

[@monicavega2090]

​​@@TheTaxGeek thank you^!

[@ohiogirl1730]

Good video. What do you do regarding receiving a partial distribution from a will of a deceased sister? The amount is 50k. Is it taxable on both Massachusetts state tax and IRS also. Thanks in advance. Love your show and just subscribed with Like.

[@TheTaxGeek]

Well, it depends. If the estate is passing through to you income that would have been taxable to the decedent then it would be taxable to you.. If it's taxable, the income will be reported to you on either a Schedule K-1 or a 1099R. A straight money or property inheritance is not taxable to you. If it's taxable to the Federal government, it most likely is taxable to Massachusetts. Although I don't know the detailed ins and outs of Massachusetts income tax. For more information on how death affects taxes, you might want to check out this video: kzbin.info/www/bejne/pnrMkJ6lnbtrq6s

[@lenz-xb9jt]

Hi, any idea how deal with Box 17 code AJ, but there are 2 AJ values. Please help. Thank you.

[@TheTaxGeek]

Assuming that's an S-Corporation K-1, the amount(s) in Box 17, Code AJ are potential losses that might affect your Excess Business Loss Limitation. Unless you have overall business losses on your return of $289,000 ($578,000 if MFJ), I wouldn't be concerned.

[@No1isWatchn]

Thank you for this video! However, my brain fog won't allow me to comprehend a few things: I was the administratrix of my deceased parents' estate. I received a substitute form 1099-S. I have allocated proceeds to each of my 3 siblings and myself. I haven't received a schedule k-1, but I did print a blank one. I would love to just enter my portion of the proceeds into taxfreeusa software on my 1040, but it's not that simple. Do I need to fill out a 1041 first, then do the schedule k-1? I get so lost in the jargon--interest income, dividends, capital gains and losses. Please help. Thanks.

[@TheTaxGeek]

You cannot have K-1s without an underlying tax form, such as a 1041, 1065, or 1120S. That being said, you probably have little to no gain on the sale of the house due to "stepped up basis." Regardless of what your parents originally paid for the property, the basis of the property when calculating any gain is the Fair Market Value of the property as of the date of the last parent to die.

[@mikeandren4229]

Great video. I have received a K-1 (Form 1065) for trading in a particular security within my Roth IRA. Do I report this K1 on my return?

[@TheTaxGeek]

If the K-1 is truly part of your Roth IRA, it is not reported on your tax return.

[@mikeandren4229]

@@TheTaxGeek Yes. In Part II, Line I1 says Roth IRA and for line I2, the box is checked. Looks like I don't need to report the info on my return. So why would I receive a K-1 (Form 1065) in the first place? What is the point?

[@miguelcubero3440]

After re-watching this video I always ask myself the same question: Why do publically traded partnerships need a k-1? I understand all other entities, but given that most PTP will likely be reported in summary 1099-Brokerage statement, it seems unnecessary to even issue one. Given that a majority of separately stated items on the k-1 for a PTP could be easily placed on the 1099-misc with any Tax consolidated brokerage report. Again this is only refering to PTP's not normal partnerships. Perhaps there is a valid reason but it feels that most of the reported items are generally reported already. Curious about other's thoughts?

[@TheTaxGeek]

Publicly Traded Partnership, are when all is said and done, partnerships. They don't in and of themselves pay taxes on their income, and pass the items of income and expense to the partners, who report them on their individual returns. Yeah, I know it's clunky. However, unlike the 1099-MISC, a k-1 can report dozens of items there is no room for on the 1099-MISC (just look at the list of codes on the second page of the K-1). As always, thanks for your continued support of my channel; your thoughts and comments are always appreciated.

[@miguelcubero3440]

@@TheTaxGeek Thank you for the reply! You are really building a great and curious community here on youtuhe with dialogue.

[@teoacogido4263]

Hi tax geek. Do you have a socials that I can communicate directly if i have some question?

[@TheTaxGeek]

You can e-mail me at [e-mail]. I am also on "X" @taxgeekusa and on Reddit /r/askataxgeek, but I don't check them as often as I should.