Which TurboTax Version Do You Need?
If you own MLP units, you need TurboTax Premier or higher. TurboTax Deluxe does not support Schedule K-1 entry — the option simply isn't there. TurboTax Free Edition doesn't either. If you start with a lower tier, you'll be forced to upgrade mid-return when you try to enter partnership income.
Both TurboTax Online Premier and TurboTax Desktop Premier support K-1 entry. Desktop is slightly faster for investors entering multiple K-1s because navigation between forms is more direct. Online works fine for one or two K-1s.
TurboTax Self-Employed also includes K-1 support and may be appropriate if you also have Schedule C income. For most MLP investors, Premier is the correct tier.
2026 Filing Season Pricing (approximate)
- TurboTax Premier Online: ~$90–$120 (includes federal + one state)
- TurboTax Premier Desktop: ~$100–$130 (includes 5 federal e-files + one state)
- Additional state returns: ~$40–$60 each (relevant for MLP multi-state filing)
Warning
Do not start with TurboTax Free or Deluxe if you have K-1 income. You'll be forced to upgrade mid-return and may need to re-enter data. Start with Premier from the beginning to avoid wasted time and potential data loss during the upgrade process.
What to Have Ready Before You Start
Before opening TurboTax, gather everything you'll need. K-1 entry goes smoothly when you have all documents in front of you. Stopping mid-entry to find a document risks entering data in the wrong fields.
- Your K-1(s) from each partnership — check the EIN on each one. If you own Energy Transfer, you should have 3 separate K-1s with 3 different EINs.
- Your original purchase records — date purchased, price per unit, number of units. You'll need this if TurboTax asks about your at-risk basis or if you're doing a disposition.
- Prior year's ending basis — from your own records, a CPA's workpapers, or the K-1 Basis Tracker. TurboTax does not carry this forward for you.
- Supplemental statements — attached to the K-1, these contain Box 20 code details, state allocation percentages, and §199A QBI information. Do not discard them.
K-1 Boxes TurboTax Will Ask About
TurboTax's K-1 interview covers the following boxes. Have values ready for each one that has an amount on your K-1:
Most MLP K-1s will only have values in a handful of these boxes. The common ones are Box 1 (ordinary income/loss), Box 19A (distributions), Box 13 (deductions), and Box 20 (supplemental codes). If a box is blank on your K-1, leave it blank in TurboTax.
Step-by-Step K-1 Entry in TurboTax
Follow these steps exactly. The order matters — TurboTax's interview-style flow guides you through each section, but it's easy to miss critical fields if you rush.
Navigate to the K-1 Section
Go to Federal → Wages & Income → Partnerships and S Corporations (Schedule K-1). Click "Start" or "Revisit" if you've been here before.
Select the Correct K-1 Form Type
Select "Schedule K-1 (Form 1065)" — this is the partnership form used by all MLPs. Do NOT select "Schedule K-1 (Form 1120-S)" — that's for S-corporations. Selecting the wrong form type will misroute your data on your return.
Enter Partnership Information
From the top of your K-1, enter the partnership name, EIN (Employer Identification Number) from Item A, and your partner number from Item D. The EIN is critical — it's how the IRS matches this K-1 to the partnership's filing.
Check the "Publicly Traded Partnership" Box
THIS IS CRITICAL. TurboTax will ask if this is a publicly traded partnership — answer Yes for every exchange-traded MLP (ET, EPD, MPLX, PAA, WES, CQP, and all others traded on NYSE/NASDAQ). Without this checkbox, TurboTax applies the wrong passive activity loss rules. See the PTP section below for why this matters.
Enter Box 1 Through Box 20 Values
TurboTax presents each box on its own screen. Enter values exactly as shown on your K-1. Values in parentheses on the K-1 are negative — enter them as negative numbers in TurboTax (e.g., if Box 1 shows "(1,234)", enter -1234). Do not add a negative sign to positive amounts. Leave blank boxes empty.
Enter Box 20 Supplemental Codes
After the main K-1 boxes, TurboTax will ask about Box 20 codes from your supplemental statement. The most common for MLPs is Code Z (§199A QBI) — enter the qualified PTP income, W-2 wages, and UBIA exactly as shown on the supplemental. Other relevant codes: V (UBTI, IRAs only), N (BIE → Form 8990), AB (§751 gain, sale year), AE (§163(j) ETI → Form 8990), AH (noncash charitable contributions). Enter each code separately on the screens TurboTax provides. See the Box 20 Codes Reference for the full map.
Review the Summary Screen
Before moving on, verify the summary screen. Check that the EIN matches your K-1, Box 1 is correct (including sign), and Box 19A (distributions) matches your K-1 exactly. These are the three most common entry errors.
Key Insight
Always cross-reference: The EIN on the K-1 should match what TurboTax shows in the summary. For Energy Transfer, this means three different EINs — one per partnership. If you see the wrong EIN, you've entered values from the wrong K-1.
The PTP Checkbox — Why It Matters
PTP stands for Publicly Traded Partnership. Every MLP traded on a stock exchange — ET, EPD, MPLX, PAA, WES, CQP, and dozens of others — is a PTP. This designation isn't just a label. It activates an entirely separate set of tax rules that control how your losses are treated.
Under IRC §469(k), PTP income and losses are segregated from all other passive activities. This creates three critical consequences:
PTP losses can ONLY offset income from the same PTP
If your Enterprise Products K-1 shows a net loss, that loss can only offset future Enterprise Products income. It cannot reduce your tax on Energy Transfer income, rental income, or any other passive income — even though all are "passive."
PTP losses do NOT enter the general passive loss bucket
Regular passive losses (from rental properties, non-PTP partnerships) are pooled together and can offset each other. PTP losses are isolated. Each PTP is its own island. Losses from one PTP cannot offset income from another PTP.
Suspended PTP losses: partial sales net, full dispositions release
Gain on selling PTP units is income from that PTP for the year, so the PTP’s losses, current-year and prior-year unallowed, are allowed against it to the extent of the PTP’s income for the year, even on a partial sale, and the rest carries forward (Form 8582 instructions, Special Instructions for PTPs). Only when you dispose of your entire interest in that PTP in a fully taxable transaction to an unrelated party is the PTP’s overall loss for the year no longer limited by the passive loss rules (IRC §469(g)(1)(A); §469(k)(3)). Enter the prior-year unallowed amount for each PTP separately.
Warning
If you forget to check the PTP box, TurboTax may incorrectly allow your PTP losses to offset other passive income — rental income, other partnership income, or passive K-1 income from non-PTP sources. This creates an incorrect return that could trigger IRS matching when they compare your return against the K-1 data they already have. The IRS knows which K-1s come from PTPs.
Energy Transfer's Three K-1s
Energy Transfer is the most complex K-1 entry for TurboTax users because ET unitholders receive 3 separate K-1s from 3 different EINs. Each must be entered as its own partnership in TurboTax. This is not optional — these are legally distinct partnerships.
Energy Transfer LP
The primary partnership. Typically receives ~85–90% of your initial cost basis allocation. This K-1 usually has the largest Box 1 and Box 19A values.
Sunoco LP (SUN)
Fuel distribution subsidiary. Has its own EIN, its own Box 1, and its own distributions. Must be entered separately in TurboTax.
USA Compression Partners
Another subsidiary partnership. Typically the smallest basis allocation. Has its own EIN and K-1 values that must be entered independently.
When you sell ET units, all three partnerships dispose simultaneously. Each has its own gain/loss calculation and its own §751 recapture amount. Your broker's single cost basis number cannot capture this three-way split.
For the full walkthrough including basis allocation percentages and how the three entities interact, see the Energy Transfer (ET) K-1 Guide.
Warning
This is the #1 TurboTax error for ET investors. If you only enter one K-1, you're underreporting income from two partnerships. The IRS receives all three K-1s and will flag the mismatch. Each K-1 has a different EIN — enter all three.
See Your Real Basis
Enter your K-1 data and see your IRS-adjusted basis in seconds. Free, no signup required.
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Open K-1 Basis TrackerMulti-State Filing and TurboTax
MLPs operate across multiple states. Your K-1 supplemental statement includes state allocation percentages showing how much income is sourced to each state. If you have income sourced to states where you don't live, you may owe non-resident state returns — and TurboTax will not automatically generate them.
TurboTax treats each state as a separate add-on product at ~$40–$60 per state. For an MLP operating in 5–10 states, that's $200–$600 in additional TurboTax fees — on top of the Premier subscription. This cost adds up fast if you hold multiple MLPs, each operating in different states.
De Minimis Thresholds
Most states have de minimis thresholds — ranging from $0 to $1,000 of state-source income depending on the state — below which filing isn't required. Before purchasing additional state add-ons in TurboTax, check your K-1 supplemental statement. If your allocated income to a particular state is below its threshold, you likely don't need to file there.
For a complete breakdown of which states require filing, their thresholds, and which MLPs generate the most multi-state exposure, see the MLP State Filing Requirements guide.
Key Insight
Some composite return programs allow the partnership to file and pay state tax on your behalf — check your K-1 supplemental statement for a note about composite filing. If the partnership filed a composite return for you in a particular state, you do not need to file a separate non-resident return there.
Common TurboTax K-1 Entry Errors
These are the five most common errors we see from MLP investors entering K-1 data in TurboTax. Each one can result in an incorrect return, IRS matching issues, or overpaid tax.
Entering Box 1 as positive when K-1 shows parentheses
Values in parentheses on the K-1 are negative. If Box 1 shows "(2,450)", enter -2450 in TurboTax. Entering 2450 as a positive number changes a loss into income — doubling the error. The box label "Ordinary business income (loss)" does not mean the value is negative. The parentheses around the number do.
Forgetting the PTP checkbox
Without the PTP designation, TurboTax applies standard passive activity rules instead of PTP-specific rules. This can incorrectly allow losses from one MLP to offset income from another, or let MLP losses reduce rental income — neither of which the IRS allows for publicly traded partnerships.
Only entering 1 of Energy Transfer's 3 K-1s
ET unitholders receive K-1s from three separate partnerships. Entering only the largest one means underreporting income from two entities. The IRS receives all three K-1s and will notice the missing income.
Using the wrong K-1 form type (1120-S instead of 1065)
MLPs are partnerships and use Form 1065. S-corporations use Form 1120-S. If you select the S-corp form, TurboTax processes your K-1 data under different rules — no PTP treatment, different passive loss calculations, wrong forms generated. Always verify you selected "Form 1065" for MLP K-1s.
Skipping Box 20 supplemental codes (especially Code Z for §199A)
Box 20 Code Z contains your §199A Qualified Business Income data — qualified PTP income, W-2 wages, and UBIA from the supplemental statement. Skipping it means missing a tax deduction you're entitled to — potentially hundreds of dollars. TurboTax asks about Box 20 codes on a separate screen after the main K-1 entry. Don't skip past it. Note: Code AH is noncash charitable contributions, not §199A — a different field on a different screen.
What TurboTax Won't Tell You
TurboTax is a form-filler. It accurately processes the K-1 data you enter and places the numbers on the correct lines of your tax return. But the critical MLP tax issues — the ones that create five-figure tax surprises — happen entirely outside TurboTax's scope.
TurboTax does NOT calculate your IRS-adjusted basis. It does not implement the Partner's Basis Worksheet. It does not track how each year's K-1 adjusts your basis. It has no record of your cumulative basis position.
TurboTax does NOT track basis erosion from year to year. Each year is processed independently. TurboTax doesn't know that your distributions have been eroding your basis for years, or that your basis may be approaching zero.
TurboTax does NOT warn you about §751 recapture exposure. When you sell MLP units, a portion of your gain is reclassified as ordinary income (taxed up to 37%) due to accumulated depreciation. TurboTax doesn't calculate or display this — the sales schedule in your final K-1 package handles it.
TurboTax does NOT verify your broker's 1099-B basis. If your broker reports a cost basis of $8,400 and your real K-1-adjusted basis is $4,200, TurboTax won't flag the discrepancy. You must know to override the broker's number on Form 8949.
TurboTax does NOT file non-resident state returns for MLP state-source income. You must purchase separate state add-ons and manually determine which states require filing based on your K-1 supplemental statement's state allocation percentages.
TurboTax does NOT calculate Form 990-T if your IRA's UBTI exceeds $1,000. If you hold MLP units in an IRA and your aggregate UBTI exceeds $1,000, the IRA itself owes tax on Form 990-T — filed by the IRA custodian or trustee. TurboTax doesn't generate this form. Most investors don't know it exists until the IRS contacts them.
The bottom line: TurboTax handles form preparation. It puts the numbers on the right lines. But it doesn't know your real basis, won't catch basis-dependent errors, and can't warn you about the MLP-specific tax issues that cost investors the most — §751 recapture, basis erosion, and multi-state filing.
For the IRS basis worksheet that TurboTax doesn't provide, see the K-1 Basis Worksheet Explained or run your numbers through the K-1 Basis Tracker.
What TurboTax Misses
TurboTax doesn't track your MLP basis. See your real IRS-adjusted number — and what you'd actually owe if you sell.
In the K-1 tracker, typing your numbers in uploads nothing; an uploaded K-1 PDF is read by a third-party AI provider. Privacy
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Frequently Asked Questions
TurboTax Premier or higher. Deluxe does not support Schedule K-1 entry. TurboTax Online Premier works, and Desktop Premier also works. The Free and Deluxe versions will prompt you to upgrade when you attempt to enter K-1 data — you cannot bypass this. If you have any K-1 income (from MLPs, rental partnerships, or S-corps), start with Premier to avoid re-entering data after a forced upgrade.
Each K-1 is entered separately. Navigate to Federal > Wages & Income > Schedule K-1 and click "Add another K-1" for each one. Energy Transfer investors must enter 3 separate K-1s — one each for Energy Transfer LP, Sunoco LP, and USA Compression Partners. Each K-1 has its own EIN. Never combine values from multiple K-1s into a single entry.
No. TurboTax processes each year's K-1 data for your tax return but does not maintain a running basis calculation. You are responsible for tracking your outside basis separately using the IRS Partner's Basis Worksheet methodology. TurboTax does not adjust your cost basis for distributions, income allocations, or liability changes. When you sell, you need to know your real basis independently of TurboTax.
PTP stands for Publicly Traded Partnership. Check this box for any MLP traded on a stock exchange — ET, EPD, MPLX, PAA, WES, CQP, and all others. This tells TurboTax to apply PTP passive loss rules under IRC §469(k): PTP losses can only offset income from the same PTP, not other passive income. Missing this checkbox causes TurboTax to incorrectly allow PTP losses to offset rental income or other partnership income.
TurboTax does not change Box 1 — it displays exactly what you entered. If the numbers differ, you may have entered the wrong amount, missed a negative sign (values in parentheses on the K-1 are negative), or are looking at the wrong K-1. Double-check that the EIN matches. Energy Transfer investors often confuse which K-1 goes with which entity — all three have different Box 1 values.
No. You must wait for your actual K-1 from the partnership. Do not estimate or use prior year numbers — K-1 values change every year. K-1s for tax year 2025 are typically released between March and April 2026. If you need to file before your K-1 arrives, file an extension using Form 4868. The extension is free, automatic, and gives you until October 15 to file.
Box 20 contains supplemental information with lettered codes. The most common for MLPs is Code Z (§199A Qualified Business Income) — TurboTax will ask you to enter it on a separate §199A screen after the main K-1 entry, with W-2 wages and UBIA broken out from the supplemental statement. Code V (UBTI) only matters for retirement accounts holding MLP units. Code AB is §751 gain (sale year only). Code AE is §163(j) Excess Taxable Income (Form 8990) — not §199A. Code AH is noncash charitable contributions — not §199A despite occasional confusion. Always check the partnership’s supplemental statement legend and enter exactly what is shown. Do not skip these — they affect your deductions and credits. See the Box 20 Codes Reference for the full code map.
Disclaimer: This content is for educational and informational purposes only. It does not constitute tax, legal, or financial advice. MLP taxation involves complex rules including basis tracking, §751 recapture, passive activity limitations, and multi-state filing. Consult a qualified tax professional before making tax or investment decisions.
Lucas Andersen is not a CPA, Enrolled Agent, or tax attorney. Information reflects rules as of the date published and may change. Always verify with current IRS guidance.