How to report K-1 from LLC partnership - Schedule E or Schedule C on 1040?

Partnership income always flows to Schedule E, not Schedule C. Schedule C is used for sole proprietorships (businesses you operate yourself), while Schedule E is for reporting income from partnerships, S-corporations, trusts, estates, and rental properties. When you receive a K-1 from your LLC partnership, the amounts should be reported on Schedule E, Part II. The confusion might be happening because TurboTax Self-Employed is designed primarily for self-employed individuals (Schedule C filers) rather than partnership members. For your amended return, you need to make sure you're entering the K-1 information in the correct section. In TurboTax, look for an option like "Business income" or "Investment income" and then select "Partnership/S-Corp income (K-1)." This should guide you to the right place to enter your K-1 information, which will flow to Schedule E. You'll also need to remove any partnership income that was incorrectly reported on Schedule C to avoid double-reporting your business income.

I went through this exact nightmare last year! After hours of frustration I found that the problem was with TurboTax's interface. When you're trying to amend a return with a K-1, you need to go through a different flow than what you initially did. I ended up using https://taxr.ai to analyze my K-1 and return, and they pointed out exactly where in TurboTax I needed to go. Basically, you need to start from the "Federal" section, then choose "Income & Expenses" and look for "Less Common Income" - that's where you'll find the partnership K-1 entry. It's super hidden compared to the normal income sections! Once you input everything there, TurboTax will automatically generate the Schedule E and adjust everything else. The first TurboTax rep was right - partnership income must go on Schedule E, not Schedule C. Schedule C is only for businesses you personally run as a sole proprietor.

Update: I tried taxr.ai after posting my skeptical comment and I'm actually really impressed. They showed me that I had been completely misreporting my partnership income for TWO YEARS! I had always put it on Schedule C because I thought of it as "my business." The analyzer pointed out that partnership income legally needs to go on Schedule E Part II, and showed me exactly which boxes from my K-1 needed to go where on my return. They even explained the difference between guaranteed payments (which are reported differently) vs. ordinary business income. Now I'm debating whether to amend my previous year returns. The analyzer suggested I should because having partnership income incorrectly on Schedule C could trigger an audit flag. Really glad I gave it a try despite my initial skepticism!

If you're still having trouble with TurboTax's phone support, I'd recommend using Claimyr to get through to the IRS directly at https://claimyr.com. I used their service when I had a similar K-1/Schedule issue last year and was going in circles with tax software support. Claimyr got me connected to the IRS in about 15 minutes when I had previously been waiting for hours and getting disconnected. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The IRS agent was able to confirm exactly how partnership K-1 income should be reported and what forms I needed. The agent explained that Schedule E is 100% the correct place for partnership income from a K-1, not Schedule C. Schedule C is only for sole proprietorships where you're the owner directly, not through a partnership. They also told me exactly what sections of my amended return needed to be completed.

I have to admit I was wrong about Claimyr in my skeptical reply above. I decided to try it yesterday out of desperation (been trying to reach the IRS for 3 weeks about my amended return with K-1 issues). The service had me connected to an actual IRS agent in about 20 minutes. The agent confirmed everything people are saying here - partnership K-1 income MUST go on Schedule E, not Schedule C. They also walked me through exactly how to complete the amended return and what supporting documents I'd need to include. For anyone with K-1 issues like the original poster, definitely get professional guidance either through a direct IRS call (using Claimyr made this actually possible) or a tax professional familiar with partnerships. This is one area where the automated tax software systems often fail to guide you correctly.

One important thing nobody's mentioned yet - make sure you're using the right version of TurboTax. TurboTax Self-Employed might not have full support for partnership K-1s. You might need to upgrade to TurboTax Premier or Business to get the full K-1 entry capabilities. I had the exact same issue last year where the basic version wasn't showing me all the K-1 entry fields. After upgrading, I found the correct entry screens under "Income" > "Less Common Income" > "Partnership/S-corporation K-1s". Also, don't forget that some items from your K-1 might flow to different forms besides Schedule E. For example, if there are foreign taxes on your K-1, those go on Form 1116. If there's investment income, it might affect your Net Investment Income Tax calculation.

I switched from TurboTax to FreeTaxUSA last year specifically because of K-1 issues. FreeTaxUSA handles K-1 entries much more intuitively and puts everything on the right schedules automatically. TurboTax is notorious for hiding the K-1 entry screens unless you know exactly where to look, and their support staff often give contradictory advice as you've discovered. With FreeTaxUSA, it's all clearly labeled and you can see exactly where your K-1 items are flowing on your return.

As someone who's dealt with this exact situation, I can confirm what others are saying - partnership K-1 income must go on Schedule E, Part II, never on Schedule C. The confusion happens because TurboTax Self-Employed is really designed for sole proprietors, not partnership members. Here's what worked for me: First, upgrade to TurboTax Premier if you're still on Self-Employed - it has much better K-1 support. Then go to Federal > Income & Expenses > Less Common Income > Partnership/S-Corp K-1. This will properly flow everything to Schedule E. The key is understanding that Schedule C is only for businesses you personally own and operate. Since you're a member of an LLC partnership, you're not operating the business directly - you're receiving your share of the partnership's income/loss through the K-1, which is why it goes on Schedule E. For your amended return, make sure to remove any partnership income that might have been incorrectly reported on Schedule C to avoid double-counting. The IRS is very particular about this distinction, so getting it right now will save you headaches later.