Road Map for Import of Schedule K-1 data by 1040 Tax Software

The Essentials

1. Decide Import Channel(s) to Support

There are three channels for K-1 data import: (1) FDX JSON file import, (2) PDF file (with embedded FDX JSON) file import, and (3) API import.

JSON file import and PDF file import are essentially the same thing since PDF file import consists of simply extracting the JSON from the PDF.

Supporting file import is essential for the following reasons:

Many more K-1 issuers have the capability to export K-1 data files than can host API servers
File import requires less programming time than an API client and related user interface
FDX JSON files are self-identifying. The JSON tells you what documents are included in the file. Setting up file import for one type of document paves the way for importing any tax document for which FDX schemas are defined. And there are over 50 of them.

2. Decide Import Contexts to Support

There are three possible contexts for K-1 data import: (1) menu context, (2) interview topic context, and (3) EIN (employer identifying number) specific context.

Why we believe menu context is essential:

It can be shared by both desktop and online editions, by both forms mode and interview mode
Flexibility. Any supported tax document can be imported
It provides simplicity, especially for newly-supported tax documents

3. Implement File Upload

Present a screen to browse to the file to upload and/or drag and drop the file into the drop zone.

For online editions, accept the file using HTTP multipart/form-data technology.

Decide whether to immediately read and process the file contents in memory or store the file and hand off processing to a separate processing step.

4. Implement JSON Extraction

Using your preferred PDF file processing library extract JSON from the PDF.

Alert the user if the file did not contain embedded JSON.

5. Implement JSON Deserialization

Deserialize the JSON to an FDX object using your favored JSON processing library.

FDX object definitions are available upon request from the Financial Data Exchange organization. Email fdxsupport@financialdataexchange.org to get a copy of the FDX specification and schema files. They are also available via GitHub repository for a nominal fee. (Email support@schedulek-1.com for details and access).

6. Implement FDX Object Mapping

For each item on Schedule K-1, you will map the data from the FDX object to your software object.

Download skeleton code that is intended to jump-start the process for you.

7. Implement Data Merging

Merge the data into the users tax return. See this page for merging stratagies.

Beyond The Essentials

1. API Client

Prompt the user for K-1 tax document "credentials" or for K-1 data "coordinates". See this page for details.

Then retrieve the data from the document server. See this page for details.

2. API Server

There are now many applications assisting taxpayers and tax preparers to collect and assemble annual tax documents. Many of these extract tax data from the documents and are positioned to push that data into tax software applications. However, not enough tax software applications provide API server technologies at this time.

Additionally, many taxpayers would be willing to give permission to tax document issuers to securely forward their annual tax document data to a trusted application as soon as the data is available.