Possibly. If the S corporation has no foreign income, assets, or other international items to report AND all shareholders forego (completely) the claiming of foreign tax credits on their individual returns, then the S corporation could potentially skip the filing of Schedules K-2 and [...]
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 [...]
Most likely. The IRS’s FAQs on Schedules K-2 and K-3, released in mid-February 2022, clarified that many partnerships and S corporations, including those that do not have foreign assets or operations, may need to file the new forms: “In many instances, a partnership or [...]
Formerly, Form 1120-S 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 shareholders’ individual income tax returns were either lumped together on Schedule K-1, lines 14 and 17d, [...]
Schedule K-2 is a new 14-page form with 7 total parts. It is filed as part of your Form 1120-S, S Corporation Tax Return. It is basically an expansion of Schedule K to provide greater detail on items of international tax relevance from the [...]
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 your prior-year Schedules K-1 mentioned foreign items in lines 16 and 20c (1065) or lines 14 and 17d (1120-S), or in the accompanying statements, you should receive a Schedule K-3 for 2021. If you do not receive a 2021 Schedule K-3, then you [...]
You should expect to receive a Schedule K-3 this year with organized, detailed information on the items formerly covered in Schedule K-1 (1065), lines 16 and 20c, or Schedule K-1 (1120-S), lines 14 and 17d, and the accompanying statements. Schedule K-3 will provide details [...]
In most cases, yes. However, if you must file Form 8865 to report your ownership in a foreign partnership, then you may need to paper file your 2021 individual income tax returns. The IRS has announced that Form 8865 will not be available for [...]
We don’t advise this. You must sign your tax return under penalties of perjury to attest that the return is complete and accurate to the best of your knowledge. Signing under false pretenses constitutes fraud and can subject you to penalties and prison time. [...]
