Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Schedules K-1 and Rental Income Workout

Schedule K-1

How and where can income be reported?

Income reported on Schedule K-1 will be included on the taxpayer's return in various places depending on the type of income. Income reported on Schedule K-1 that is within the scope of VITA/TCE programs includes:

  • Interest income (Form 1040, line 8a, unless Schedule B is required)
  • Dividend income (Form 1040, line 9a, unless Schedule B is required)
  • Net short-term capital gains and losses (Schedule D, line 5)
  • Net long-term capital gains and losses (Schedule D, line 12)
  • Tax-exempt interest income (Form 1040, line 8b)
  • Royalty income (Schedule E)
    • In Part I, enter a code 6 for royalties. Refer to the Schedule E Instructions for more information.

Royalty income is in scope for the VITA/TCE programs only when the source document of the royalty income is reported on Schedule K-1 or Form 1099-MISC, Box 2, Royalties, with no associated expenses. For these investors, the depletion allowance would already have been figured for them by the partnership or S corporation. Any other income, deductions, credits, etc., reported on Schedule K-1 is out of scope for the VITA/TCE programs, and the taxpayer should be referred to a professional tax preparer.

Form 1065 Schedule k-1 and Schedule E.
Schedule E
Form 1065_schedule_k1

Schedule E

Form 1065_schedule_k1