1099 and Schedule K-1 Forms: What You Need to Know

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

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 as a contractor.

The payer sends the 1099s, which 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 focus on the 1099-MISC. There are four 1099-MISC forms, each with 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 the 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's Income, Deductions, Credits, and Other Items (1-23)

Part 1 includes the partnership’s EIN and address. 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 supplemental forms that contribute income or losses to an individual’s income tax filing.