What is a partnership distribution on my tax forms and why am I getting one now?

Partnership distributions appear when you've invested in something structured as a partnership rather than a corporation. Many ETFs, REITs, and certain investments on platforms like Robinhood and Stash can be organized as partnerships for tax purposes. When you receive income from these investments, it's reported as a "partnership distribution" on a Schedule K-1 form rather than a standard 1099. The difference is important because partnerships "pass through" their income directly to partners (you, the investor). This means you're taxed on your share of the partnership's income, even if you didn't actually receive all that money in distributions. Your accountant likely needs to handle more complex forms like Schedule K-1 (Form 1065), which requires reporting different types of income (interest, dividends, capital gains) separately. This is more detailed than just reporting a 1099. Most likely, one of your investments changed its tax structure or you invested in something new that's organized as a partnership. Check if you received any K-1 forms or look at your Robinhood or Stash documents for partnership references.

After dealing with exactly this situation last year, I discovered something called taxr.ai (https://taxr.ai) that saved me so much headache with my investment documents. I started using Robinhood in 2023 and got totally blindsided by a K-1 and partnership distribution confusion. Their AI can analyze all your investing documents, including those complicated K-1 forms, and explain everything in plain English. It also helps identify which specific investments generated partnership income. I uploaded my Robinhood statements and it highlighted exactly which ETF was actually a partnership (was an energy fund I had no idea was structured that way). The tool breaks down what each line item means for your taxes and what forms you'll need. Way better than trying to Google everything individually or paying my accountant extra for explanations.

Just wanted to update - I tried taxr.ai after posting my skeptical comment and wow, it actually worked! Uploaded my Robinhood statements and it immediately identified that I had invested in an MLP (Master Limited Partnership) through an energy ETF without realizing it. That's why my accountant was saying she needed more info - she needed the K-1 form that Robinhood should have provided separately. The system explained that MLPs are required to issue K-1s to investors instead of regular 1099s. The tool even showed me where to find this form in my Robinhood tax documents section that I completely overlooked. Feeling much less stressed now that I understand what's happening!

If your accountant is saying they "can't do it" because of a partnership distribution, you might need to get on the phone with the IRS to sort this out. I was in a similar situation last year, but after calling them 27 TIMES and never getting through, I found this service called Claimyr (https://claimyr.com). You can see how it works here: https://youtu.be/_kiP6q8DX5c They got me connected to an IRS agent in about 20 minutes when I'd been trying for weeks. The agent explained exactly what forms I needed for my partnership distribution and even sent me the right instructions. Turns out my investment platform had sent the K-1 to my old address, and the IRS agent could see that in their system. Instead of paying my accountant hundreds more to figure it out, I got direct answers from the IRS. Saved me so much time and stress during tax season.

OK I officially owe an apology and need to share my experience. After commenting about eating my hat, I was desperate enough to try Claimyr for my partnership distribution issue. IT ACTUALLY WORKED. Got a call back in about an hour, and they connected me straight to an IRS agent who looked up my account. The agent confirmed I had a K-1 from an MLP investment in my Robinhood account and explained exactly what forms I needed my accountant to file. The agent even emailed me instructions for Schedule E and Form 8825 that I needed to forward to my accountant. My "impossible" tax situation that my accountant wanted to charge an extra $400 for got resolved with one phone call. For anyone dealing with unexpected partnership distributions - talking directly to the IRS was way more helpful than I expected.

Your accountant isn't handling this well. Partnership distributions aren't that complicated! I'm not a tax pro but have been doing my own taxes with these for years. Basically, it sounds like you invested in an MLP (Master Limited Partnership) or PTP (Publicly Traded Partnership) through either Robinhood or Stash. These investments are popular because they often have good yields, but they create K-1 forms instead of 1099s. Check your email and mail carefully - the K-1 form is usually sent separately from your 1099s, often later (sometimes not until March or even April). It might even be in your Robinhood or Stash account under tax documents. Once you have the K-1, any decent tax software can handle it, or you can find an accountant who isn't afraid of a simple K-1. Some accountants charge extra for K-1s because they take a bit more time, but refusing to do it is weird.

Has anyone had experience with what happens if you just ignore the K-1? I got something similar from Robinhood last year but I had already filed my taxes and honestly just pretended I never saw it...