Schedule K-1 (Form 1120-S): every box and where it goes on Form 1040
Schedule K-1 (Form 1120-S) is the IRS form an S corporation gives each shareholder to report their share of its income, deductions, credits and other items. The shareholder reports those amounts on Form 1040 after applying the basis, at-risk, passive activity and excess business loss limits.
“The corporation uses Schedule K-1 to report your share of the corporation’s income, deductions, credits, and other items.” IRS, Shareholder's Instructions for Schedule K-1 (Form 1120-S) (2025)
What is Schedule K-1 (Form 1120-S)?
Schedule K-1 (Form 1120-S) is the statement an S corporation prepares for each shareholder to report that shareholder's share of the corporation's income, deductions, credits and other items. According to the 2025 Shareholder's Instructions for Schedule K-1 (Form 1120-S), the shareholder keeps the K-1 and doesn't file it with Form 1040 unless box 13 shows backup withholding under code O. The corporation files a copy with the IRS.
Part I identifies the corporation and its total shares. Part II identifies the shareholder, including item G (current year allocation percentage), item H (shares at the beginning and end of the year) and item I (loans from the shareholder at the beginning and end of the year). Part III, boxes 1 to 19, holds the amounts. Three rules from the instructions apply to every K-1: S corporation income isn't self-employment income, the K-1 doesn't show dividends the corporation reports on Form 1099-DIV, and a calendar-year shareholder reports a fiscal-year K-1 on the return for the year the corporation's fiscal year ends.
Where does each K-1 (1120-S) box go on Form 1040?
Each box on Schedule K-1 (Form 1120-S) has a reporting destination set by the Shareholder's Instructions, and most income and loss boxes land on Schedule E (Form 1040), line 28. Where a box splits by passive status, column (g) takes allowed passive losses, column (h) passive income, column (i) nonpassive losses, column (j) the section 179 deduction and column (k) nonpassive income.
| K-1 box | What it is | Where it goes (2025 Form 1040) |
|---|---|---|
| Box 1 | Ordinary business income (loss) | Schedule E, line 28: column (i) or (k) if you materially participated; column (h) for passive income; column (g) for a passive loss after Form 8582 |
| Box 2 | Net rental real estate income (loss) | Schedule E, line 28: column (h) for income, column (g) for a loss (through Form 8582 unless every special allowance condition is met); column (i) or (k) for a real estate professional who materially participated |
| Box 3 | Other net rental income (loss) | Schedule E, line 28: column (h) for income, column (g) for a loss after Form 8582 |
| Box 4 | Interest income | Form 1040, line 2b |
| Box 5a | Ordinary dividends | Form 1040, line 3b |
| Box 5b | Qualified dividends | Form 1040, line 3a |
| Box 6 | Royalties | Schedule E, line 4 |
| Box 7 | Net short-term capital gain (loss) | Schedule D, line 5 |
| Box 8a | Net long-term capital gain (loss) | Schedule D, line 12 |
| Box 8b | Collectibles (28%) gain (loss) | 28% Rate Gain Worksheet, line 4 (Schedule D instructions) |
| Box 8c | Unrecaptured section 1250 gain | Unrecaptured Section 1250 Gain Worksheet, line 5; lines 10 and 11 for amounts shown on a statement |
| Box 9 | Net section 1231 gain (loss) | Form 4797, line 2, column (g); a passive loss goes through Form 8582 first |
| Box 10 | Other income (loss), by code | By code: for example C to Form 6781, J to Schedule 1 line 8z, K gambling winnings to Schedule 1 line 8b, S to Schedule D lines 5 and 12 |
| Box 11 | Section 179 deduction | Form 4562, Part I, then Schedule E, line 28, column (j) if nonpassive |
| Box 12 | Other deductions, by code | By code: for example A and B to Schedule A line 11, C to G to Schedule A line 12, H to Form 4952 line 1, AB to Schedule 1 line 18 |
| Box 13 | Credits, by code | Form 3800, Part III, or the credit form for the code; code O backup withholding to Form 1040, line 25c |
| Box 14 | Schedule K-3 attached | Schedule K-3 (Form 1120-S) for items of international tax relevance |
| Box 15 | AMT items, by code | Form 6251: code A line 2l, code B line 2k, code C line 2d, codes D and E line 2t |
| Box 16 | Items affecting shareholder basis | Form 7203; code A also on Form 1040, line 2a; distributions above stock basis to Form 8949 and Schedule D (see box 16 codes) |
| Box 17 | Other information, by code | By code: A and B to Form 4952 lines 4a and 5, U to Form 8960, V to Form 8995 or 8995-A, AA and AB to Form 8990 Schedule B line 45, AC to the section 448(c) gross receipts test, AN to Schedule E line 42 |
| Box 18 | More than one activity for at-risk purposes | Attached statement, used on Form 6198 activity by activity |
| Box 19 | More than one activity for passive activity purposes | Attached statement, used on Form 8582 activity by activity |
Boxes 10, 12, 13 and 15 to 17 use letter codes, and the destination depends on the code. An asterisk after a code means the corporation attached a statement, and "STMT" in the amount column means the information can't be reported as one number. Box 17 code V is always a statement. The amounts in boxes 1 to 17 are before any limitation, so a loss in box 1 may not reach Schedule E in full.
In what order do the loss limits apply to a K-1 (1120-S)?
Losses and deductions on Schedule K-1 (Form 1120-S) pass through four limits in a fixed order before they reach Form 1040, according to the Shareholder's Instructions. Limits specific to one deduction, such as the section 179 limit, apply before the at-risk and passive rules.
- Basis: stock and loan basis under IRC section 1366(d), figured on Form 7203; disallowed amounts carry forward indefinitely
- At-risk: Form 6198, activity by activity
- Passive activity: Form 8582 for losses and Form 8582-CR for credits
- Excess business loss: Form 461 under section 461(l)
Prior-year losses suspended under the basis or at-risk rules come back year by year. The instructions say not to combine them with the current K-1 amounts to get a net figure, except for passive activity losses and credits. When a shareholder has other amounts from the S corporation to report on Schedule E, each one goes on its own line 28 entry. Boxes 18 and 19 tell you the corporation has more than one activity and attached a statement splitting the amounts, which matters because Form 6198 and Form 8582 both work activity by activity.
What does a K-1 (1120-S) mapping look like?
For example, Dana owns 25% of an S corporation and works in the business full time, so her box 1 income is nonpassive. She starts 2025 with $40,000 of stock basis and no shareholder loans. Her 2025 Schedule K-1 (Form 1120-S) shows $85,000 in box 1, $1,200 in box 4, $3,000 in box 5a ($2,400 of it qualified in box 5b), $4,500 in box 8a, $800 in box 16 code C, $60,000 in box 16 code D and a code V statement in box 17.
| K-1 item | Where it goes | Stock basis after |
|---|---|---|
| Beginning stock basis | Form 7203, line 1 | $40,000 |
| Box 1, ordinary income $85,000 | Schedule E, line 28, column (k); Form 7203, line 3a | $125,000 |
| Box 4, interest $1,200 | Form 1040, line 2b; Form 7203, line 3d | $126,200 |
| Box 5a, dividends $3,000 (box 5b, $2,400) | Form 1040, lines 3b and 3a; Form 7203, line 3e | $129,200 |
| Box 8a, long-term gain $4,500 | Schedule D, line 12; Form 7203, line 3g | $133,700 |
| Box 16, code D, distributions $60,000 | Form 7203, line 6 | $73,700 |
| Box 16, code C, nondeductible expenses $800 | Form 7203, line 8a | $72,900 |
| Ending stock basis | Form 7203, line 15 | $72,900 |
Dana has to file Form 7203 because she received a non-dividend distribution. The $60,000 is tax-free because her $133,700 of basis after income covers it, and Form 7203 applies distributions before nondeductible expenses. Her code V statement goes to Form 8995 or Form 8995-A depending on her taxable income before the QBI deduction.
What do reviewers check on a Schedule K-1 (1120-S)?
A reviewer checking Schedule K-1 (Form 1120-S) on the shareholder's return confirms six items, each tied to the Shareholder's Instructions or the Instructions for Form 1120-S. Start with the prior-year K-1 and Form 7203, because basis, suspended losses and the passive status of each activity carry forward from them. Then read the current K-1 with every statement attached. Codes with an asterisk point to a statement, and the code V statement and any box 18 or 19 activity statement change where amounts go. Compare item G with the shares in item H, because a change in ownership during the year means the percentage is weighted by the days each share was held. The Shareholder's Instructions say errors go back to the corporation for a corrected K-1, not changed on your copy.
Every line checked against the documents the client sent
Filed reads the client's Schedule K-1 (Form 1120-S), its attached statements and the prior-year return, then checks every K-1 box against the lines it flows to on Form 1040. Anything that doesn't tie comes back as a review item with a citation to the source.
Book a demoBox 16, code D shows $60,000 of distributions, and Form 7203 shows $48,500 of stock basis before distributions, but no gain appears on Form 8949 or Schedule D. Confirm whether the $11,500 excess should be reported as capital gain.
Common questions
Do you attach Schedule K-1 (Form 1120-S) to Form 1040?
Schedule K-1 (Form 1120-S) is generally not attached to Form 1040. The Shareholder's Instructions say to keep it for your records unless box 13 reports backup withholding under code O. In that case, attach the K-1, or a statement with the corporation's name, address, EIN and backup withholding amount.
Is S corporation K-1 income subject to self-employment tax?
No. S corporation income on Schedule K-1 (Form 1120-S) isn't self-employment income and isn't subject to self-employment tax, according to the Shareholder's Instructions. Wages the corporation pays a shareholder-employee go on Form W-2, and the Instructions for Form 1120-S treat payments to an officer as wages to the extent they are reasonable compensation.
Which year do you report a fiscal-year S corporation K-1?
A calendar-year shareholder reports a fiscal-year Schedule K-1 (Form 1120-S) on the return for the year the corporation's fiscal year ends. The Shareholder's Instructions give the example of a corporation whose tax year ends in February 2026: the shareholder reports those K-1 amounts on their 2026 return.