Whether you’re a small LLC, an Electing Large Partnership LLC or an S-Corporation, March 15th marks the date you must file your 2016 tax returns (Form 1065, 1065-B, 1120S, or 2553, depending upon your business entity).
In addition to filing your taxes by this date, March 15th also marks the deadline for sending out Schedule K-1s to your partners or shareholders.
What is a Schedule K-1?
A Schedule K-1 outlines a shareholders or LLC partner’s share of income, deductions, and credits from the business of which they hold some ownership. K-1s are provided to the IRS with the partnership’s (or corporation’s) tax return in addition to each partner or shareholder to use for their own tax returns.
What do I do if I'm a partner?
If you are an owner in an LLC or S-Corp, the IRS has detailed information on how to handle and report the information on your K-1 for your personal tax return. You do not need to file your K-1 with your return unless you have been specifically required to do so. It is for your own records and to help inform your personal return. The corporation or partnership you work with will file the K-1s for all partners or shareholders with the IRS. Find out more on the IRS website.
Need an Extension?
Extensions on the Schedule K-1 distribution are available, but must be requested prior to March 15th. You can request an extension by filing Form 7004 online through the IRS to receive a six month extension, making your filing deadline September 15.
Trusts & Estates - Don’t Forget Your K-1s!
In some cases, a trust will pay the income on its earnings and will file a Form 1041 for tax returns, but in other cases, the income tax responsibility is passed along to the beneficiaries. In that case, each beneficiary should receive a K-1 that shows the income they received from the trust so they can report that on their tax return. Remember that whenever a beneficiary receives income from the trust, the trust should count that as a deduction so that the estate is not being taxed on this income twice.