How to Complete Virginia Schedule VK-1: Filing, Copies, and Withholding

Virginia Schedule VK-1 is the form a pass-through entity uses to report each owner’s share of income, deductions, Virginia modifications, and credits for the year. You prepare one VK-1 for every person who held an interest at any point in the tax year, file them electronically with Form 502, and give each owner their own copy by April 15 for calendar-year filers. An automatic six-month extension pushes the entity’s filing deadline to October 15 with no application required, but the owner copies and any nonresident withholding payment are still due on the original date.1Virginia Tax. Pass-Through Entities

Who Prepares a VK-1

Virginia Code § 58.1-392 requires every pass-through entity with Virginia business activity or Virginia-source income to file Form 502 and prepare a Schedule VK-1 for each owner.2Virginia Code Commission. Virginia Code 58.1-392 – Reports by Pass-Through Entities That covers general partnerships, limited partnerships, LLCs, LLPs, and S corporations. Where the entity was formed doesn’t matter; Virginia-source income triggers the filing.

The entity itself normally pays no Virginia income tax. Income flows through to owners, who report it on their own Virginia returns, and the VK-1 is what connects the entity’s Form 502 to each owner’s individual filing.

What to Gather Before You Start

Pull these items together before opening the form:

  • The entity’s federal employer identification number.
  • Each owner’s Social Security number, or FEIN if the owner is itself an entity.3Virginia Department of Taxation. Instructions for Preparing 2025 Form 502 Virginia Pass-Through Entity Return of Income and Return of Nonresident Withholding Tax
  • The completed federal Schedule K-1 for each owner (Form 1065 for partnerships, Form 1120-S for S corporations), which supplies the baseline income, deduction, and ownership figures.
  • The entity’s total Virginia additions and subtractions from Schedule 502ADJ, ready to allocate by ownership share.
  • Any Virginia tax credits the entity earned, with the credit codes listed in the Form 502 instructions.

Owner Identification Block

The top of each VK-1 identifies the owner and how they participate. Every field uses a specific code or format from the Form 502 instructions:3Virginia Department of Taxation. Instructions for Preparing 2025 Form 502 Virginia Pass-Through Entity Return of Income and Return of Nonresident Withholding Tax

  • Line a is the date the owner first acquired their interest, in MM/DD/YYYY format.
  • Line b takes the owner-type code: RES for a Virginia resident individual, NON for a nonresident individual, SC for an S corporation, CC for a C corporation, TE for a trust or estate, and so on through the full code list.
  • Line c identifies participation type: GPT for a general partner, LPT for a limited partner, LLM for an LLC or LLP member, SHR for an S corporation shareholder, or OTR for anything else.
  • Line d is the ownership percentage. For S corporation shareholders, use the stock percentage from federal K-1 (Form 1120-S), Line G. For partners, use the ending profit-share percentage from federal K-1 (Form 1065), Line J. If the percentage changed during the year, use the figure as of the last day of the tax year. Across all VK-1s for the entity, these percentages should total 100%.4Virginia Department of Taxation. Virginia Schedule VK-1
  • Line e is any Virginia income tax withheld on behalf of a nonresident owner.
  • Line f is the withholding exemption code, if the entity is not required to withhold for this owner.

Income, Additions, and Subtractions

The body of the form has three blocks: the owner’s share of income and deductions, Virginia additions, and Virginia subtractions. Lines 1 through 7 on the VK-1 line up with the same line numbers on Form 502. In most cases you compute each owner’s share by multiplying the entity total by the owner’s participation percentage, though some partnership agreements provide for special allocations that override a straight percentage split.3Virginia Department of Taxation. Instructions for Preparing 2025 Form 502 Virginia Pass-Through Entity Return of Income and Return of Nonresident Withholding Tax

Lines 1–7: Income and Deductions

Line 1 reports the owner’s share of total taxable income, Line 2 covers total deductions, and Line 3 captures tax-exempt interest income. These come from the entity’s federal return and Form 502. Added together across all owners, each line should equal the corresponding Form 502 total, with one exception: Line 7 carries the same value for every owner.

Lines 8–13: Virginia Additions

Virginia additions increase the owner’s Virginia taxable income beyond what the federal return shows. The common entries are:5Virginia Department of Taxation. Virginia Schedule VK-1

  • Lines 8 and 9, conformity adjustments for depreciation differences and other federal/Virginia conformity gaps.
  • Line 10, net income tax or similar tax the entity deducted federally; Virginia does not allow the deduction.
  • Line 11, interest on bonds or obligations of other states or their localities. Virginia taxes this even when the issuing state does not.
  • Line 12, other additions, each with its own code from the Form 502 instructions.

Line 13 totals the additions.

Lines 14–18: Virginia Subtractions

Subtractions reduce the owner’s Virginia taxable income:

  • Lines 14 and 15, the subtraction side of depreciation and other conformity adjustments.
  • Line 16, income from U.S. government obligations such as Treasury bonds, which Virginia does not tax.
  • Line 17, other subtractions with their applicable codes.

Line 18 totals the subtractions. Both totals flow to the owner’s individual Virginia return, where they adjust federal adjusted gross income to arrive at Virginia taxable income.

Credits and the Elective PTE Tax

Page 2 reports any Virginia tax credits allocated to the owner. Each credit has a unique code; the full list sits in the Form 502 instructions. Total nonrefundable credits from Part IV, Line 1 also carry to the VK-1 Consolidated.

If the entity elects to pay income tax at the entity level under § 58.1-390.3, each credit-eligible owner’s VK-1 must identify them and show their specific credit amount.6Virginia Code Commission. Virginia Code 58.1-390.3 – Elective Income Tax on Pass-Through Entities Leaving that information off means the owner cannot claim the PTE tax credit on their individual return.7Thomson Reuters. Virginia Releases Elective Pass-Through Entity Tax Guidance Owners claiming the PTE credit must also add back their proportionate share of any state and local income tax the entity deducted that same year. If an owner’s VK-1 isn’t ready by their personal filing deadline, they can make an extension payment and file during the extension, or file without the credit and amend once the VK-1 arrives.

The Schedule VK-1 Consolidated

Along with the individual VK-1s, the entity includes a Schedule VK-1 Consolidated with Form 502. The consolidated summarizes, for every owner, the data from lines a through f, lines 1 through 7, totals of additions and subtractions (lines 13 and 18), and total nonrefundable credits.8Virginia Department of Taxation. Instructions for Preparing 2024 Form 502 Virginia Pass-Through Entity Return of Income and Return of Nonresident Withholding Tax When you include it, you don’t send individual VK-1s to the Department of Taxation. Owners still get their own.

One warning: the Consolidated contains every owner’s tax information on a single document. Don’t share it with the owners. Each owner receives only their own individual Schedule VK-1.

Filing With Virginia

Virginia requires pass-through entities to file Form 502 and all supporting schedules, including every VK-1, electronically.9Virginia Tax. Electronic Filing Requirements A waiver is available only if the entity shows in writing that electronic compliance would create an unreasonable burden.2Virginia Code Commission. Virginia Code 58.1-392 – Reports by Pass-Through Entities Free options from Virginia Tax include eForms (direct entry on the website), the Business Online Services Account, Web Upload for bulk filing when an entity has many owners, and approved commercial tax software. Keep the confirmation number from any successful transmission as proof of timely filing.

Giving Copies to Owners

The entity must provide each owner with their individual Schedule VK-1 on or before the Form 502 due date.3Virginia Department of Taxation. Instructions for Preparing 2025 Form 502 Virginia Pass-Through Entity Return of Income and Return of Nonresident Withholding Tax For calendar-year entities that means April 15, even if the entity plans to use the six-month extension for its own return. Owners need the VK-1 to complete their Virginia return, whether that’s Form 760 for full-year residents, Form 760PY for part-year residents, Form 763 for nonresidents, or Form 502 if the owner is itself a pass-through entity.

Nonresident Owner Withholding

If the entity has nonresident owners, it must either withhold Virginia income tax for them or include them in a composite return filed under the entity’s own FEIN.1Virginia Tax. Pass-Through Entities The withholding amount for each nonresident appears on Line e of their VK-1.

The withholding payment itself is due on the original return date, April 15 for calendar-year filers, regardless of the automatic extension on Form 502. Use Form 502W to submit it. For composite returns, the entity instead makes estimated payments with Form 760ES.

Penalties for Missing a Deadline

Several penalties can stack when a pass-through entity files late or underpays:1Virginia Tax. Pass-Through Entities

  • Extension penalty: if the entity doesn’t pay at least 90% of the withholding tax due by the original date, 2% per month (or partial month) until Form 502 is filed, capped at 12%.
  • Late payment penalty: if tax isn’t paid in full when the return is filed, 6% per month, capped at 30%.
  • Late filing penalty: filing Form 502 after the extended due date (October 15 for calendar-year filers) triggers a flat $1,200 penalty. For any month where both late payment and late filing penalties would apply, the entity pays whichever is greater, not both.
  • Continued failure penalty: if the return remains unfiled more than six months past the due date, the Department may assess a penalty equal to 6% of the Virginia taxable income the owners derive from the entity, reduced by any monthly penalties already imposed.3Virginia Department of Taxation. Instructions for Preparing 2025 Form 502 Virginia Pass-Through Entity Return of Income and Return of Nonresident Withholding Tax

The return must be signed by one of the entity’s owners, and that signature stands as evidence the signer was authorized to file for the entity.2Virginia Code Commission. Virginia Code 58.1-392 – Reports by Pass-Through Entities Keep copies of every VK-1, the Consolidated, and the electronic filing confirmation in case the Department follows up.