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 [...]
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 [...]
We have compiled Frequently Asked Questions for individuals to help explain how the new Schedule K-2 and K-3 will affect their individual tax filings. These explanations can be shared with any partners to help address their questions.
The partners want their Schedules K-1 and K-3 by April 18 so that they can file their individual returns by then. What should I tell them?
While the IRS is working diligently to enable individuals and entities to file their 2021 returns with the new schedules as soon as possible, guidance on the new forms continues to evolve. Since failure to properly complete or file the new schedules may subject [...]
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 [...]
In late 2021, the IRS announced that it would not begin accepting Schedules K-2 and K-3 until end of March 2022 at the earliest. It also indicated that it would begin accepting these forms for domestic partnerships and S corporations first, before individuals who [...]
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 [...]
All filers of Form 8865 must file the new Schedules K-2 and K-3, without exception.
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, [...]
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 [...]