Whether a Partnership Receives a 1099 and How Income Gets Reported Instead

Partnerships do not receive 1099s — partners do

A partnership itself never gets a 1099 form. Instead, the partnership files a Form 1065 (U.S. Return of Partnership Income) with the IRS, and each partner receives a Schedule K-1 showing their share of the partnership's income, losses, deductions, and credits. The Schedule K-1 is what tells you how much partnership income to report on your individual tax return — it replaces the 1099 role that would explore to a sole proprietor or an employee.

This distinction matters because a partnership is a pass-through entity. The partnership itself does not pay federal income tax. Instead, the income passes through to the partners' personal returns, where each partner pays tax on their share at their individual rate. The Schedule K-1 is the document that makes this pass-through happen.

Key Takeaways

• Partnerships file Form 1065 with the IRS but do not owe federal income tax themselves; income passes through to partners instead.
• Each partner receives a Schedule K-1 from the partnership, which reports that partner's share of income, losses, deductions, and credits.
• You report the amounts from your Schedule K-1 on your individual Form 1040, not on a 1099.
• A 1099 would only go to a partnership if it earned income from an outside source — for example, if the partnership received interest or dividends that a bank or brokerage reported.
• The partnership is responsible for issuing Schedule K-1s to all partners by March 15 of the year following the tax year.

How a partnership reports income to the IRS

The partnership files Form 1065 by March 15 (or October 15 if it gets an extension). This form shows all the partnership's revenue, expenses, gains, losses, and deductions for the year. The IRS uses Form 1065 to verify that the amounts reported on partners' individual returns match what the partnership reported.

Attached to Form 1065 is a Schedule K, which summarizes the partnership's income and deductions at the partnership level. Then, for each partner, the partnership prepares a Schedule K-1 that breaks down that partner's individual share. If the partnership has three partners and $300,000 in net income, and you own 33%, your Schedule K-1 will show approximately $99,000 of partnership income allocated to you.

The partnership must send you your Schedule K-1 by March 15. You then use this form to fill out your own Form 1040. The income from your Schedule K-1 goes on Schedule C (if you are a self-employed partner), Schedule E (if you are a passive investor), or another schedule depending on the type of income and your role in the partnership.

When a partnership might receive a 1099

Although the partnership itself does not get a 1099 for its own business income, a partnership can receive 1099s for income from outside sources. For example, if the partnership has a business bank account that earns interest, the bank will issue a 1099-INT to the partnership. If the partnership owns stocks or mutual funds that pay dividends, the brokerage will issue a 1099-DIV.

These 1099s go to the partnership's tax identification number (EIN), not to individual partners. The partnership then includes this income on Form 1065, and the income flows through to partners via their Schedule K-1s. So the 1099 is an intermediate step — it tells the partnership what income to report, and the partnership then tells the partners.

Similarly, if the partnership pays an independent contractor or vendor more than $600 in a year, the partnership issues a 1099-NEC or 1099-MISC to that vendor. The partnership does not receive these forms; it issues them.

The difference between a Schedule K-1 and a 1099

A 1099 reports income paid to you by someone else — a client, a bank, a brokerage, an employer (in the case of a 1099-NEC for contract work). A Schedule K-1 reports your ownership share of income earned by an entity you are part of. The 1099 is a third party saying "we paid you this." The Schedule K-1 is your entity saying "you own this share of our profit."

On your tax return, a 1099 goes directly into your income calculation. A Schedule K-1 also goes into your income calculation, but it may carry additional information — such as your share of charitable contributions, capital gains, or tax-exempt income — that affects how you calculate your tax, not just how much income you report.

Another key difference: you receive a 1099 only if someone outside the entity paid you money. You receive a Schedule K-1 whether the partnership made a profit or a loss. If the partnership lost $50,000 and you own 50%, your Schedule K-1 will show a $25,000 loss that you can use to offset other income on your return.

What you need to do with your Schedule K-1

When you receive your Schedule K-1, check it carefully for errors — wrong name, wrong EIN, wrong income amount, or wrong allocation percentage. If you spot an error, contact the partnership when ready and ask for a corrected K-1. The partnership must issue corrected K-1s if mistakes are found.

Once you have the correct Schedule K-1, you report the income on your Form 1040. The specific schedule depends on your role and the type of income. If you are an active partner in a service business (such as a law firm or medical practice), you typically report on Schedule C. If you are a passive investor in a real estate partnership, you report on Schedule E. The partnership or your tax preparer can tell you which schedule applies to your situation.

Keep your Schedule K-1 with your tax records for at least three years. The IRS can audit your return and compare your reported income to the Schedule K-1 the partnership filed, so having the original document is important if questions arise.

Self-employment tax and partnership income

Partnership income is subject to self-employment tax (Social Security and Medicare tax) if you are an active partner. The partnership calculates your share of self-employment income and reports it on your Schedule K-1. You then report this on Schedule SE (Self-Employment Tax) and pay the self-employment tax along with your income tax.

If you are a passive investor in a partnership — meaning you do not work in the business — your share of income may not be subject to self-employment tax, depending on the type of partnership and the nature of the income. This is one reason the Schedule K-1 breaks down income by type: the partnership is telling you which portions are subject to self-employment tax and which are not.

The self-employment tax rate is 15.3% (12.4% for Social Security on income up to a cap, and 2.9% for Medicare on all income). This is in addition to your regular income tax. Understanding which partnership income is subject to self-employment tax can affect your overall tax bill significantly.

Frequently Asked Questions

Do I report my partnership income on a 1099 or a Schedule K-1?

You report it on a Schedule K-1, which the partnership issues to you. A 1099 is for income paid to you by someone outside the partnership. Your partnership income comes from being an owner of the partnership, so it flows through a Schedule K-1 instead.

What if the partnership does not send me a Schedule K-1 by March 15?

Contact the partnership when ready. You cannot file your return accurately without it. If the partnership is unresponsive, you may be able to file your return using a reasonable estimate of your share and then file an amended return once you receive the K-1, but this creates risk of penalties. The partnership is legally required to issue K-1s by March 15.

Can I owe self-employment tax on partnership income even if the partnership made a loss?

No. Self-employment tax is calculated on net self-employment income. If the partnership had a loss, your share of that loss reduces your self-employment income, and you may owe no self-employment tax. However, you still report the loss on your return, which can offset other income.

If I receive a 1099 with the partnership's EIN on it, should I report it?

No. If a 1099 is issued to the partnership's EIN, the partnership will include that income on Form 1065, and your share will appear on your Schedule K-1. Reporting it again on your personal return would be double-counting. Only report income that appears on your Schedule K-1 or on a 1099 issued in your own name.

What happens if my Schedule K-1 shows a different income amount than I expected?

Ask the partnership for an explanation. The K-1 may reflect adjustments the partnership made — such as depreciation, amortization, or disallowed deductions — that reduce your reported income below what you actually withdrew. The partnership should be able to explain every line on your K-1.