Is there anything else I need to know?

At the time of this blog post, the IRS was still making changes to its approach to Schedules K-2 and K-3 in response to push-back from tax professionals and other parties. In particular, the American Institute of Certified Public Accountants (AICPA) and other organizations [...]

By |2022-03-10T17:20:38-05:00March 10th, 2022|

What should I do if I don’t receive a Schedule K-3?

If you (or your foreign partnership) typically receive Schedules K-1 from partnerships or S corporations, and you are expecting Schedules K-3 this year, then you will generally need to wait for them before you can file your individual tax return. If you are expecting [...]

By |2022-03-10T17:19:55-05:00March 10th, 2022|

Will I be able to e-file this year?

Most likely. The IRS FAQs released in mid-February 2022 indicated that the IRS would not accept e-filed Schedules K-2 and K-3 from individuals with Forms 8865 until January 2023! Form Number                            [...]

By |2022-03-10T17:17:34-05:00March 10th, 2022|

What happens if I don’t file the Schedules K-2 and K-3?

The penalty for failing to file or filing an incomplete Schedule K-2 or K-3 is $10,000. This penalty can be applied at both the entity level and the individual partner level. The IRS has provided temporary relief for this penalty for 2021 under Notice [...]

By |2022-03-10T17:11:50-05:00March 10th, 2022|

Why is the IRS requiring these?

Formerly, Form 8865 Schedules K and K-1 did not require any specific format to provide international information. As a result, many details needed for the accurate preparation of partners’ individual income tax returns were either lumped together on Schedule K-1, lines 16 and 20c, [...]

By |2022-03-10T17:36:33-05:00March 10th, 2022|

What are Schedules K-2 and K-3?

Schedule K-2 is a new 14-page form with 8 total parts. It is filed as part of your Form 8865, Foreign Partnership Return, within your individual tax return. It is basically an expansion of the Form 8865 Schedule K to provide greater detail on [...]

By |2022-03-10T16:55:02-05:00March 10th, 2022|
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