Schedule K-1
Definition
The statement issued by a partnership, S corporation or trust telling each partner, shareholder or beneficiary their share of income, deductions and credits. Recipients need it to complete their personal returns, so late K-1s commonly force extensions.
Related Terms in US Tax
Estimated Tax
Periodic prepayments of US federal and state income tax made by those whose income is not subject to sufficient withholding, including the self-employed and many business owners. Paid on a quarterly schedule set by the IRS, with underpayment penalties for falling short.
Safe Harbor (Estimated Tax)
A rule that protects a taxpayer from underpayment penalties if their prepayments meet a defined minimum, generally measured against either the current years liability or the prior years tax, with a higher prior-year test for higher earners. The precise percentages are set by the IRS and should be checked for the year concerned.
Nexus
The connection between a business and a US state sufficient to create a tax obligation there. Physical nexus arises from premises, staff or inventory; economic nexus arises from exceeding a states sales or transaction thresholds, which differ by state and are published by each revenue department.
Marketplace Facilitator
A platform that facilitates third-party sales and is required by state law to collect and remit sales tax on those sales instead of the seller. It relieves sellers of collection on marketplace orders but not of their own direct-channel obligations or registration requirements.
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