Schedule K-1s, which are tax forms used to report a partner’s or shareholder’s income, losses, capital gain, dividends, etc., to the IRS, are sent to more than 40 million U.S. taxpayers each year.
There are several different types of K-1 forms, which we will discuss later, but the K-1 is designed to make it easier to measure the contributions of a shareholder toward the overall performance of a business.
K-1s are sometimes confused with Form 1099s, which are tax information documents for individuals who are not employees, like sole proprietors and freelancers. K-1s, however, are quite different and can come with some complexities for tax and accounting firms.
To dig deeper, visit the original article on the Thomson Reuters blog.