Purpose of Schedule K-1

The corporation uses Schedule K-1 to report your share of the corporation’s income, deductions, credits, and other items. Keep it for your records. Don’t file it with your tax return unless backup withholding is reported in box 13 using code O. (See the instructions for Code O, later.) The corporation files a copy of Schedule K-1 with the IRS.

For your protection, Schedule K-1 may show only the last four digits of your identifying number (social security number (SSN), employer identification number (EIN), or individual taxpayer identification number (ITIN)). However, the corporation has reported your complete identifying number to the IRS.

You may be liable for tax on your share of the corporation’s income, whether or not distributed. Include your share on your tax return if a return is required. Use these instructions to help you report the items shown on Schedule K-1 on your tax return.

Your share of S corporation income isn’t self-employment income and it isn’t subject to self-employment tax.

Caution: The amount of loss and deduction you may claim on your tax return may be less than the amount reported on Schedule K-1. It is the shareholder’s responsibility to consider and apply any applicable limitations. See Limitations on Losses, Deductions, and Credits , later.

Schedule K-1 doesn’t show actual dividend distributions the corporation made to you. The corporation must report such amounts totaling $10 or more for the calendar year on Form 1099-DIV, Dividends and Distributions.

Schedule K-1, box 17, code ZZ. P.L. 119-21 added section 1062, Gain from the sale or exchange of qualified farmland property to qualified farmers. For tax years beginning after July 4, 2025, an S corporation must

Instructions for Schedule K-1 (Form 1120-S) (2025) Catalog Number 11521O Jan 6, 2026 Department of the Treasury Internal Revenue Service www.irs.gov