This generally affects your income taxes in one of two ways: either by increasing your tax liability or by providing you with a tax deduction. If the K1 is associated with income, then it will likely increase your total tax liability for the year. This is because most forms of income are taxable, and the k1 simply reports this information to the IRS. However, if the IRS form K1 represents a loss or expenditure (for example, if you’re investing in a partnership), then it may provide you with a tax deduction. This can reduce your overall tax liability for the year, potentially saving you money.