Partners receiving a Schedule K-1 from a partnership, and LLC members receiving a K-1 from a limited liability company (LLC) must report the amounts on IRS Form 1040 Schedule E, page 2. Tax software programs
usually have a Schedule K-1 input screen, where you can type in the information from the K-1 onto a screen that looks exactly like the K-1.
Generally speaking, ordinary net business income or loss is reported on Schedule E. Other income items are reported in the appropriate part of the 1040 tax return. For example, interest and dividends passed-through by an LLC or partnership are reported on Schedule B. Capital gains are reported on Schedule D. And so forth. Your tax software program will take the information on the K-1 input screen and report the income and expense amounts in the right place on your Form 1040.
Request an Extension
The first thing any partner or LLC member should do is request an automatic extension of time to file
. Why? The deadline for IRS Form 1065 is April 15th, and truth be told, few partnerships and LLCs can meet this deadline. Partners should request an automatic extension, making their personal tax deadline October 15th. Partnerships will not issue Schedule K-1s until the Form 1065 is completed, so partners will need to wait to file their return if the partnership return is not finised.