Subchapter S corporations (“Sub S”), partnerships, limited liability companies (“LLC’s”) and estates and trusts issue form K-1s. This form documents the stockholders, partners, members or beneficiaries share of their profit or loss from the entity. Don’t wait for this form to get started on your income tax return.
1) K-1s Aren’t Due Until March 15th
All form K-1s are not due until March 15th. If the Sub S corporation files an extension however, then the K-1 does not have to be issued until September 15th. This April 15th due date makes it very challenging for taxpayers. Their individual income tax return is due the same day. You can’t file your individual income tax return without your K-1s.
2) We Are Seeing More Amended K-1s
Investing in limited partnerships, particularly oil and gas that issue K-1s has become popular again. Just like amended 1099 forms, we have seen an uptick in the amount of amended K-1s last year. The changes on the amended K-1 may or may not be material.
Either way, your CPA will need to review the amended K-1.
3) Let Your CPA Get Started on Your Tax Return
This is key. Get all of your other tax material you have to your CPA. Let them get started. They can rough out the return. This will give you a sense of where you are at. Get the heavy lifting done up front. If you are timely your CPA should have the return good to go. Just add the information from the K-1 and the return should be complete.
4) You May Have to Go on Extension
The 2022 individual income tax return, Form 1040, is due on April 18, 2023. If you can’t file on time because you did not receive your K-1 timely, you will need to file an extension. This is done on Form 4868, Application for Automatic Extension of Time to File U.S. Income Tax Return. A properly filed extension request will extend the due date to file until October 15, 2023. The extension only extends the time to file the return. It does not extend the time to pay any tax due. Any tax due needs to be paid by April 15th. Failure to pay the tax then will result in interest and penalty.
Tom Scanlon has over thirty years experience in public accounting with an extensive background in the areas of financial, tax, and estate planning. He prides himself on providing in-depth and customized solutions to privately held businesses and their owners. He is a Certified Public Accountant and Certified Financial Planner®. Tom is a frequent speaker for area organizations and has recently been quoted on CNBC, Fox 61 News and AARP's blog. Tom also has been a guest columnist for numerous publications including The Wall Street Journal, Barron's, Money Magazine, The Hartford Courant, The Hartford Business Journal, and The New Haven Register. He is a member of the American Institute of Certified Public Accountants, the Connecticut Society of Certified Public Accountants, and the Financial Planning Association. Active in the community, Tom supports a variety of not-for-profit organizations.
Hi, I received one more K1 after I filled my return, this one just came in, income $109. Would this be an issue that I didn’t include this K1? Amended return will cost me $150. Can I include the K1 next year?