I just received notice that I was going to receive a Schedule K-1 later this year. Does this impact my current filing?

[Cynthiad66]

It depends.  If you are receiving a K-1 for 2021 then it will, most likely, affect your 2021 filing.  However, if the K-1 is for tax year 2022 then you will include it with the 2022 filing in 2023.

Sounds like it may be for Tax Year 2022.

[bbala1964]

Thanks!  It's definitely for 2021 but they say we will not receive it until September, well after the April 15th filing deadline.  Will I have to file an amended return after I receive it?   

[Cynthiad66 · Accepted solution]

Yes you will need to file a 1040X if the information on the K-1 affects reportable income.  Or, you can choose to file for an extension to file your 1040.

All form K-1s are not due until March 15th. If the Sub S corporation files an extension however, then the K-1 does not have to be issued until September 15th.  This April 15th due date makes it very challenging for taxpayers. Their individual income tax return is due the same day. You can’t file your individual income tax return without your K-1s.

The 2021 individual income tax return, Form 1040, is due on April 15, 2022. If you can’t file on time because you did not receive your K-1 timely, you will need to file an extension. This is done on Form 2848, Application for Automatic Extension of  Time to File U.S. Income Tax Return. A properly filed extension request will extend the due date to file until October 15, 2021. The extension only extends the time to file the return. It does not extend the time to pay any tax due. Any tax due needs to be paid by April 15th. Failure to pay the tax then will result in interest and penalty.

Have I confused you?  Well, the short story is you can file now and be prepared to amend when you receive your K-1 or you can file an extension on your form 1040.

If you decide to extend - Follow these steps to file for an extension using Turbotax:  Filing an Extension Using TurboTax

IRS extensions for tax year 2021 must be filed on or before April 18, 2022 for domestic taxpayers.

It isn't possible to file a post-deadline extension.

Keep in mind: An extension doesn't give you extra time to pay your taxes — but it will keep you from getting a late filing penalty. (You'll still owe interest if you pay after the deadline).

1. Open your return in TurboTax Online.
   (To do this, sign in to TurboTax and select Pick up where you left off).
2. Select File an extension at the bottom of the column on the left side of the screen.
   • If you don't see the File an extension button in Step 2 above, search for extend using your product's search function and select the Jump to link at the top of your search results.
3. Follow the on-screen instructions to e-file your extension.

Note: If you're paying additional taxes owed with direct debit, you'll need to provide your 2020 AGI for verification purposes (if you didn't file a 2020 return, enter 0 as your AGI).

If you don't have your AGI, or your extension gets rejected for the wrong AGI, here are 2 options:

1. Recommended: Pay your taxes at IRS Direct Pay (this also automatically gives you an extension).
2. Download and print Form 4868, fill it out, and get it postmarked before 11:59 p.m. on April 18. Payment and mailing instructions are on pages 3 and 4 of your printout.

[bbala1964]

Perfect!  Thanks so much!  Have a great day

[ulises78]

I am in a similar boat.  Right now I have a return, but the K1 I am expecting this year is from a sale of the assets.  That may change my return to owe taxes.  How can I know what I'll need to pay if I don't have the K1?

I know more or less the gain I got from the sale, I also have some carryover losses from previous years, mostly from accelerated depreciation (cost segregation studies).  I know that depreciation will change my cost basis but I don't know by how much.

So, how can I estimate how much I will owe to the IRS so that I can send  a payment at the same time I file for an extension?

[AliciaP1]

You can enter the K-1 with the estimated gain in box 1 and let the losses calculate.  You can then review your Form 1040 to see what the tax amount due is and pay that.  If you think it looks low, send a little extra, and vice versa.  Then when you receive your actual Schedule K-1, you can log back into your return and proceed through the K-1 entry screens and make the corrections to report the form as you receive it.

@ulises78 

[ulises78]

Thanks, but how do I estimate my cost basis? I had K1 from that investment for 2020 and 2021 and when I looked at that document it currently shows a carryover loss of about the same amount I had invested.  The total amount of money I received at the sale was about 1.4X times what I had invested originally but the carryover from that investment is almost equal to the amount I originally invested. 

[RobertB4444]

You're going to have to estimate it.  If you think the carryover losses will cover it then you have nothing to worry about - file the extension and wait until September.  If you are worried that the losses won't cover it then do the math and figure out your worst-case scenario and pay as much of that as possible.  When you are estimating a payment it is a good idea to aim high in order to avoid the penalties and interest for underpayment.

@ulises78 

[ulises78]

Thank you both @AliciaP1  and @RobertB4444 

I will try my best to get a good estimate.  

[ulises78]

Actually I have a follow-up question.

I setup a short-term payment plan with the IRS to pay my estimate taxes because I don't have enough to cover the worst case scenario.

The tool doesn't let you pick a monthly plan for short term, but is it possible to make partial payments as long as I pay the full amount by the deadline they gave me in the short term payment plan?

[PatriciaV]

Yes, you can make as many payments as you like as long as you pay off the balance by the final due date.

@ulises78