Schedule K-1 (Form 1065), box 18
Box 18: Tax-exempt income and nondeductible expenses
Tax-exempt interest and other items that affect your basis but are not taxed or deducted this year.
What box 18 reports
Tax-exempt interest income (code A), other tax-exempt income (code B) and nondeductible expenses (code C).
These do not create tax this year, but they change your basis in the partnership.
Where it goes on your return
Form 1040, line 2a (code A)
The common case
Tax-exempt interest (code A) is reported on Form 1040 or 1040-SR, line 2a. Codes B and C are generally not entered on the return, but they matter for your basis records.
When it depends on you
Tax-exempt interest can still affect other calculations such as taxable Social Security benefits. See the Partner's Instructions.
Common codes in box 18
| Code | Title | Goes to |
|---|---|---|
| A | Tax-exempt interest income | Form 1040, line 2a |
| B | Other tax-exempt income | Not entered; affects basis |
| C | Nondeductible expenses | Not entered; affects basis |
Code letters and titles change between tax years: new codes are added and old ones are retired. This list is the 2025 list. K1 FastTax reads and exports only the code letter and the amount, so check the letter against the instructions for the year printed on your K-1 and against the partnership's attached statement.
A real example line
Below, a line written the way the document text arrives, run through the same reader as your upload. The reader matches the box number and the IRS label, then reads the amount, so it still finds the line when the scan is noisy.
| Line as the engine reads it | Box | Recorded value | Status |
|---|---|---|---|
18 Tax-exempt income and nondeductible expenses A 75 C 220 | 18 | A 75; C 220 | Read |
Check before you enter it
- Keep boxes 18 and 19 in your basis worksheet even when they do not touch Form 1040.
In the K1 FastTax output
CSV column: box_18_codes, for example A:75;C:220. In the checklist a line looks like Schedule K-1 (1065) screen, box 18, code A. All CSV columns.
Official source
The IRS text for every box is in the Partner’s Instructions for Schedule K-1 (Form 1065). Use the edition for the tax year printed on your K-1, because box wording and code lists change.
Plain answers
Questions about box 18
What are codes A, B and C in box 18?
Code A is tax-exempt interest income, code B is other tax-exempt income and code C is nondeductible expenses.
Where does box 18 go on my return?
Tax-exempt interest (code A) is reported on Form 1040 or 1040-SR, line 2a. Codes B and C are generally not entered on the return, but they matter for your basis records. See the Partner's Instructions for special cases.
Is the tax-exempt interest in box 18 taxed?
Code A is reported on line 2a for information. Tax-exempt interest is generally not taxed as ordinary interest, but it can still affect other calculations, such as the taxable part of Social Security benefits. See the Partner's Instructions for Schedule K-1 (Form 1065).
Why does box 18 matter if it does not change my tax this year?
These items generally change your basis in the partnership: tax-exempt income adds to it and nondeductible expenses reduce it. Keep boxes 18 and 19 in your own basis records even when they do not touch Form 1040.
How is box 18 different from box 5?
Box 5 is taxable interest. Tax-exempt interest is in box 18, code A, and is not included in box 5.
Box 18 shows STMT instead of an amount. What do I enter?
STMT or an asterisk means the amount is on a statement attached to the K-1, so read the statement for it. K1 FastTax writes a code line that points to a statement as, for example, C:STMT, and adds the line to the review list, but it does not read attached statements.
How does K1 FastTax record box 18?
Each code and amount goes into the box_18_codes cell as a pair, for example A:75;C:220, with several lines separated by semicolons. The plain box_18 column stays empty for coded boxes.
Is box 18 the same on a Form 1120-S or Form 1041 K-1?
On a Form 1120-S K-1 these items are in box 16, codes A to C. A Form 1041 K-1 has no matching box; see box 14, other information, on that form.
Related boxes
Read box 18 from your own K-1
Free: 1 file per day, up to 10 pages, no account. Nothing is filed and nothing is entered into tax software for you.