Fill out Schedule K-1 Form 1120-S (Shareholder's Share of Income, Deductions, Credits) online
Schedule K-1 (Form 1120-S) reports each shareholder's share of income, deductions, credits, and other items from an S corporation. Like partnerships, S corporations are pass-through entities where income is taxed at the shareholder level rather than the corporate level.
How to fill out Schedule K-1 Form 1120-S (Shareholder's Share of Income, Deductions, Credits)
Identify the S corporation and shareholder
Enter the S corporation name, EIN, and address in Part I. Enter the shareholder's name, identifying number, and address in Part II. Indicate the shareholder's ownership percentage and any changes during the year.
Report the shareholder's share of income and loss
In Part III, enter the shareholder's pro-rata share of ordinary business income or loss, net rental real estate income or loss, other net rental income or loss, interest, dividends, royalties, and capital gains or losses.
Report deductions and credits
Enter the shareholder's share of Section 179 deduction, charitable contributions, investment interest expense, foreign taxes, and other deductions. Include any tax credits that pass through from the S corporation.
Report distributions and other information
Enter distributions paid to the shareholder, which reduce stock basis. Report the shareholder's share of property distributions, tax-exempt income, nondeductible expenses, and any other items needed for their individual return.
About Schedule K-1 Form 1120-S (Shareholder's Share of Income, Deductions, Credits)
Who needs this form
All shareholders of an S corporation. The S corporation prepares a K-1 for each shareholder, who then uses it to report their pro-rata share of the corporation's income and deductions on their individual tax return.
Where to submit
The S corporation files Schedule K-1 with the IRS as part of Form 1120-S. Each shareholder receives a copy to use when preparing their personal tax return. Shareholders do not file the K-1 separately but transfer the information to the appropriate lines on their Form 1040.
Source and content freshness
- Reviewed: 2026-02-24
- Filing deadlines may shift for weekends and holidays. Verify due dates with official instructions.
Common mistakes to avoid
- Not tracking shareholder stock and debt basis, which limits the deductibility of losses
- Incorrectly reporting distributions as taxable income when they are returns of basis
- Failing to account for the at-risk and passive activity limitations before deducting losses
- Confusing W-2 wages paid by the S corporation to shareholder-employees with K-1 distributions
Frequently asked questions
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Do S corporation shareholders owe self-employment tax on K-1 income?
No. Unlike partners in a partnership, S corporation shareholders do not owe self-employment tax on their distributive share of S corporation income reported on Schedule K-1. However, shareholder-employees must receive reasonable compensation (W-2 wages) for services they perform, and those wages are subject to Social Security and Medicare taxes. The IRS scrutinizes S corporations that pay unreasonably low wages to avoid payroll taxes.
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