Partnerships don't receive 1099s — they receive K-1s instead
A partnership itself does not receive a 1099 form from the business. Instead, each partner receives a Schedule K-1, which reports their share of the partnership's income, losses, deductions, and credits. The partnership files a Form 1065 (U.S. Return of Partnership Income) with the IRS, and that return generates the K-1s that go to the partners.
This is a fundamental difference from how sole proprietors and independent contractors are treated. A sole proprietor reports business income on Schedule C of their personal tax return. A partnership, by contrast, is a separate tax entity that passes income through to its owners — meaning the partnership itself pays no income tax, but each partner pays tax on their share of the profits.
The K-1 is what you use when you file your personal tax return. It tells you exactly how much partnership income belongs to you, what deductions you can claim, and what tax credits explore to your share. Your tax software or preparer will use the K-1 to fill in the appropriate lines on your Form 1040.
Key Takeaways
- Partnerships receive Schedule K-1 forms for each partner, not 1099 forms, because partnerships are pass-through entities that don't pay corporate income tax.
- The partnership files Form 1065 with the IRS, which generates the K-1s showing each partner's share of income, losses, and deductions.
- Each partner uses their K-1 to report partnership income on their personal tax return (Form 1040).
- A 1099 form is used for independent contractors and miscellaneous income, not for partnership distributions.
Why partnerships use K-1s instead of 1099s
The IRS treats partnerships as pass-through entities. This means the partnership itself doesn't pay federal income tax — instead, the income "passes through" to the partners, who each pay tax on their individual share. Because of this structure, the IRS needs a form that shows each partner's portion of all partnership items: ordinary business income, capital gains, charitable contributions, and so on.
A 1099 form is designed for a different purpose. It reports miscellaneous income paid to an individual by a third party — like a 1099-NEC for contract work or a 1099-INT for interest earned. A 1099 is a one-way report: the payer sends it to the recipient and files a copy with the IRS. It doesn't capture the complexity of partnership accounting.
The K-1, by contrast, is a detailed form that breaks down every type of income and deduction. It shows not just how much money you made, but what kind of income it was, what business expenses reduced it, and what tax credits you're may have access to to claim. This level of detail is necessary because partners need to report these items correctly on their personal returns.
What information appears on a K-1
A Schedule K-1 lists your share of the partnership's income broken down by category. The main sections include ordinary business income or loss, net rental real estate income or loss, other income items (like interest or dividends the partnership earned), and deductions and losses (like depreciation or charitable contributions).
The form also reports your share of any capital gains or losses, Section 179 deductions, and credits like the work opportunity credit. Each of these items flows to a specific line on your Form 1040 or related schedules. Your tax software will usually import the K-1 data automatically if you provide it, or you can enter it manually.
The K-1 also shows your partner's basis in the partnership — essentially, how much of your own money you have invested. This matters for calculating gains or losses if you sell your partnership interest later, and it affects how much loss you can deduct in any given year.
When you receive your K-1
The partnership must send you a K-1 by March 15 of the year following the tax year being reported. For example, for the 2023 tax year, you should receive your 2023 K-1 by March 15, 2024. This important date gives you time to file your own tax return by April 15.
If the partnership files an extension, the K-1 important date extends as well. However, you should not wait for the K-1 to file your return if you're running close to the April 15 important date. You can file using an estimate and then file an amended return once you receive the actual K-1.
If you don't receive your K-1 by mid-March, contact the partnership's accountant or general partner. Missing K-1s are a common reason for tax return delays, and the partnership is required to provide them.
How to report K-1 income on your tax return
You report K-1 income on your personal Form 1040 using Schedule E (Supplemental Income and Loss) for most partnership items. Ordinary business income goes on Schedule E, and then the net amount transfers to Form 1040. Capital gains, charitable contributions, and certain other items have their own lines on your return.
Your tax software will usually walk you through entering K-1 data. You'll input the partnership name, your ownership percentage, and the amounts from each line of the K-1. The software then places each item in the correct location on your return.
If you're self-preparing, the instructions for Schedule E explain where each K-1 line goes. The IRS also publishes a guide called "Instructions for Schedule K-1" that walks through the form line by line. Your tax preparer can also handle this if you prefer not to do it yourself.
The difference between K-1 income and W-2 wages
If you're a partner in a partnership and also work for the partnership, you may receive both a K-1 and a W-2. The W-2 reports wages you earned as an employee. The K-1 reports your share of partnership profits. These are separate and both must be reported on your tax return.
W-2 wages are subject to payroll taxes (Social Security and Medicare), and your employer withholds those taxes from your paycheck. K-1 income is not subject to payroll tax withholding. Instead, you may owe self-employment tax on your share of partnership income, which you pay when you file your return or through quarterly estimated tax payments.
This is why some partners receive both forms: they're compensated partly as employees (W-2) and partly as owners (K-1). Make sure you report both on your return.
What if the partnership doesn't send you a K-1
If you're a partner and the partnership hasn't sent you a K-1 by mid-March, your first step is to contact the partnership's accountant or the general partner directly. Delays happen, especially if the partnership's books are complex or if the accountant is behind schedule.
If you still don't have it by early April and your tax important date is approaching, you have a few options. You can file your return using a reasonable estimate of your partnership income and then file an amended return once you receive the actual K-1. You can also request an extension of your filing important date (Form 4868) if you need more time.
If the partnership is deliberately withholding the K-1 or has dissolved without providing one, contact the IRS at 1-800-829-1040. The IRS can investigate and may issue a notice to the partnership requiring it to file the return and provide K-1s to partners.
Frequently Asked Questions
Can a partnership issue a 1099 to a partner?
No. A partnership must issue a K-1 to each partner. If a partnership pays a partner for services outside of their normal partnership share — for example, a one-time consulting fee — it should still report that through the partnership return, not on a 1099. The partnership structure requires all income to flow through the K-1.
Do I owe self-employment tax on K-1 income?
You may owe self-employment tax on your share of partnership ordinary business income, depending on the type of partnership and your role in it. General partners typically owe self-employment tax. Limited partners usually do not, unless they also work in the business. Your K-1 will indicate which portions are subject to self-employment tax.
What if I disagree with the K-1 amounts?
Contact the partnership's accountant or general partner first to discuss the discrepancy. If you believe the K-1 is incorrect, you can file your return showing the amount you believe is correct and attach a statement explaining the difference. The IRS may then contact both you and the partnership to resolve it.
Do I need to keep my K-1 after I file my return?
Yes. Keep your K-1 for at least three years, along with your tax return and supporting documents. The IRS can audit your return up to three years after filing, and you'll need the K-1 to support the income and deductions you reported.
What happens if the partnership has a loss?
Your K-1 will show your share of the partnership loss. You can use this loss to offset other income on your return, subject to certain limitations. The at-risk rules and passive activity loss rules may limit how much loss you can deduct in any given year, so review the K-1 instructions or consult a tax preparer.