Yes. The new Schedule K-2 and K-3 filing requirements apply to all individuals who file Form 8865 to report an interest in a foreign partnership as part of their Form 1040, Individual Income Tax Return. In addition, if you typically receive a Schedule K-1 [...]
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 typically receive Schedules K-1 from other partnerships and you are expecting Schedules K-3 this year, then you will generally need to wait for them before you can file your partnership return. If you are expecting a 2021 Schedule K-3 but do not [...]
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.
While the IRS is working diligently to enable partnerships 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 the business [...]
Yes. The IRS has released a timeline for accepting e-filed returns with the new Schedules K-2 and K-3. Partnership returns have the earliest date: 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. Since this timeframe is after the March 15 due date for 2021 Forms 1065, the IRS indicated that any partnerships [...]
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 [...]
Possibly. If the partnership has no foreign income, assets, or other international items to report AND all partners forego (completely) the claiming of foreign tax credits on their individual returns, then the partnership could potentially skip the filing of Schedules K-2 and K-3. Again, [...]
While there are exceptions, we advise you to tread carefully. The exceptions are much more limited than expected. And failure to file Schedules K-2 and K-3 carries $10,000 penalties. As of late February 2022, the IRS continued to release new guidance and FAQs on [...]
