What You Need to Know

The 1099 and Schedule K-1 Forms are tax returned-related forms for different types of income. There are several 1099s. The one you receive depends on where the income is coming from. The K-1 is for business owners or partners in a business.

1099 Vs. Schedule K-1

1099s come in many varieties. They are used for income that doesn’t come from an employer. The following are just a few examples of 1099s:

  • 1099-INT — Interest Income
  • 1099-DIV — Dividends and Distributions
  • 1099-MISC — Miscellaneous Income
  •  1099-NEC — Nonemployee Compensation

You’ve probably received a 1099-INT or 1099-DIV. These generally come from your broker or financial institution. Freelancers have likely received a 1099-MISC if they’ve made over $600 in income with a contractor.

1099s are sent by the payer and must be sent by January 31 and, in some cases, February 15.

A K-1 Form is generated from a pass-through entity (i.e., generally a business). It identifies income or losses for partners or owners of the pass-through entity. Income is based on the partner’s equity contribution or agreement with the pass-through entity.

If you are a business owner or partner in a business, you’ll receive a K-1. An S Corp will use Form 1120S, while a partnership will use Form 1065. Taxpayers should receive the K-1 by March 15. It is generally one of the last forms the taxpayer will receive. The taxpayer receives a K-1 whether they are a general or limited partner.

1099 Form Overview

While there are many different 1099 Forms, we’ll go over the 1099-MISC. There are four 1099-MISC forms. They are copies, and each copy has a specific use.

  • Copy 1 — for recipient’s state tax department
  • Copy B — sent to the recipient
  • Copy 2 — for recipient’s state tax return
  • Copy C — record-keeping for payer

The 1099-MISC, like most 1099s, is a small form. Some of the fields you’ll find on the form include:

  • TIN of recipient and payer
  • Name and address of recipient and payer
  • Income by types
  • Taxes held by state
  • Taxed held by the federal government

Brokerage 1099s are very detailed as different security incomes can be taxed in different ways.

Schedule K-1 Form Overview

The Schedule K-1 is larger than the 1099 and split into three main parts:

  • Part 1 — Information About the Partnership (A-D)
  • Part 2 — Information About the Partner (E-N)
  • Part 3 — Partner’s Share of Current Year Income, Deductions, Credits, and Other Items (1-23)

Part 1 includes the partnership’s EIN and address. Whereas Part 1 is about the entity, Part 2 is about the individual. Part 2 includes identifying information, the share of profit/loss and liabilities, type of partnership, and withdrawals and contributions to the partnership.

Part 3 breaks down the partner’s income, losses, deductions, and credits.

Both the 1099 and Schedule K-1 are used to report income that doesn’t come from an employer. They are supplement forms that contribute income or losses to an individual’s income tax filing.

This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation.

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