What are Schedule K-1 documents used for?

By Steven Merkel AAA
A:

The Schedule K-1 is a tax document issued for an investment in partnership interests. The purpose of the Schedule K-1 is to report your share of the partnership's income, deductions and credits. It is issued around the same time as Form 1099 and serves a similar purpose for tax reporting.

While a partnership is generally not subject to income tax, you are liable for tax on your share of the partnership income, whether or not it's distributed. This tax document is commonly issued by investors when they invest in limited partnerships (LPs) and some exchange-traded funds (ETFs), such as those that invest in commodities.

The Schedule K-1 tends to have a reputation for being one of the last tax documents to be received by the taxpayer when gathering all of their tax documents to file the federal return. To add insult to the wait, the Schedule K-1 can be quite complex and require multiple entries on the taypayer's federal return, including such entries on the Schedule A, Schedule B, Schedule D and in some cases Form 6781.

Take a look at our article 10 Steps To Tax Preparation for some tips to help you file your tax return.

This question was answered by Steven Merkel.

RELATED FAQS

  1. What are the main disadvantages of a self-directed IRA?

    Find out more about self-directed IRA investments and the role of controlling drawdown in the management of a profitable ...
  2. What are some examples of the most common types of investments on an IRA?

    Explore different investments commonly held in investment retirement accounts, such as certificates of deposit and exchange ...
  3. What are the disadvantages of commodities on a Roth IRA?

    Discover what kind of commodity-based investments are allowed in a Roth IRA and what disadvantages commodity investments ...
  4. Can I buy ETFs for my Roth IRA?

    Invest in exchange-traded funds within your Roth IRA to maximize diversification and gain access to specialized markets and ...
RELATED TERMS
  1. Factor Investing

    An investment strategy in which securities are chosen based on ...
  2. Reverse Gold ETF

    Exchange traded funds that are designed to trade in a direction ...
  3. Investment Fund

    A supply of capital belonging to numerous investors that is used ...
  4. Short Gold ETF

    An exchange traded fund that seeks to profit from negative changes ...
  5. Shariah-Compliant Funds

    An investment fund which meets all of the requirements of Shariah ...
  6. Total Annual Fund Operating Expenses

    For a mutual fund or other type of fund management structure, ...
Related Articles
  1. Interested In Latin America? Eye These ...
    Mutual Funds & ETFs

    Interested In Latin America? Eye These ...

  2. ETF Options Hedge Risk of ETF Trades
    Mutual Funds & ETFs

    ETF Options Hedge Risk of ETF Trades

  3. How Does Janus's Fund Lineup Look Now?
    Investing Basics

    How Does Janus's Fund Lineup Look Now?

  4. Want To Invest In Mexico? Start With ...
    Stock Analysis

    Want To Invest In Mexico? Start With ...

  5. What Bill Gross's Arrival Means To Janus ...
    Mutual Funds & ETFs

    What Bill Gross's Arrival Means To Janus ...

Trading Center