Extend or Amend?

You've done your part.  You've gotten all of your tax information to your preparer in order and on time.  But you still are waiting on a K-1 from a partnership or S corporation.  It probably won't be big -- why not just file now and be done with it?

It can be tempting, especially if you think you have a big refund coming, to just go ahead and file anyway.  Even so, it's usually a bad idea.

Most businesses are set up nowadays as S corporations or partnerships (limited liability companies with multiple owners are usually taxed as partnerships).  Their income is taxed on the owner's returns directly. They can distribute their income without incurring an additional tax; any funds not distributed increase the owners' basis in their investment, reducing future capital gains.

The K-1 is the way S corporations and partnerships break out their income so the owners can report it properly on their own returns.  Unfortunately for owners, these can take a long time to prepare for a complex business, or one without great bookkeeping.  They don't have to be distributed at the same time as 1099 forms (normally January 31); in fact, they can be issued as late as September 15 on extended returns.

If you are up against the April 15 deadline and still waiting for your K-1, it's usually much better to extend your return.  If you file an extension, you only have to prepare the actual return once -- saving you time and preparer costs.  If you amend, you give the IRS two returns to look at instead of only one.  And if you file without the K-1 and don't correct the return when you finally get the K-1, chances are good that the IRS will notice. 

There are times taxpayers will want to file without a K-1.  If you have a huge refund coming, maybe it's worth the hassle of amending a return later to get the refund now.  Sometimes a failing or failed business just doesn't get a K-1 out in time even for extended returns; then you have to file as best you can.  But normally, extend, don't amend.  You can e-file an extension or file Federal Form 4868.  Remember, extending the return deadline doesn't extend your deadline for paying taxes.  Iowa doesn't require a separate extension form if you are 90% paid in; if you need to pay some cash, send Iowa a payment with Form IA 1040-V by the April 30 Iowa deadline.