I need to file Form 8621 in my Fed Income Tax return. But the Turbox does not show it. How do I incorporate those forms into my tax return?

[yehjt]

How do I get and incorporate Form 8621 for my tax return?

[Uncle Willie]

Someone said that you don't need to file it with the return. It would be nice to see that documented somewhere. What I see in the 8621 instructions is:

When and Where To File
Attach Form 8621 to the shareholder's tax return (or, if applicable, partnership or exempt organization return) and file both by the due date, including extensions, of the return at the Internal Revenue Service Center where the tax return is required to be filed.
If you are not required to file an income tax return or other return for the tax year, file Form 8621 directly with the Internal Revenue Service Center, Ogden, UT [social security number removed].

Every year I have to file a paper return.

[DavidD66]

You would probably be fine e-filing and mailing for 8621 separately, but I recommend printing and mailing your entire return.

[bryce_in_tx]

I've received a Schedule K-1 showing that the publicly traded partnership in which I owned shares was invested in a PFIC (passive foreign investment company).   It shows that my share of the PFIC's earnings was $12 and that I received $9 in distributions. 

On the Form 8621, when I make the QEF election, I put the $12 on line 6a and 6c. It says to enter this amount as ordinary income on my 1040.  But, I'm not an accrual basis tax payer, but a cash basis tax payer. I only received $9 of the earnings, not the full $12.  So I should only include the $9 as income on my tax return, shouldn't I? 

And I also enter the $9 on line 8b?  Do I enter anything else on lines 8 or 9?  It's very confusing.

I'm confused about line 8 and 9. I just want to declare the income and pay tax on it, I don't want to defer paying taxes on the earnings or have to calculate interest on unpaid taxes.   Do I really have to do that and keep track of that? Seriously, a whole $3?

The schedule K-1 says "These amounts are not included in your Schedule K-1 and may be required to be included in your taxable income as appropriate."

Also, how do I go about adding the tax on this to Turbotax?  I thought the software would do my taxes for me but it doesn't appear that way.  This seems very complex. 

[bryce_in_tx]

To answer my own question about accrual versus cash basis recognition of income, it looks like for someone that is making the election to treat the PFIC as a QEF that all income is to be reported on the individual's tax return in the year it is reported to them, irregardless of the amount distributed that year.

So, now I know I have $12 of ordinary income to be reported on my 1040, somewhere, from this PTP I was invested in but I don't know what line that should be reported on. Not only that, but there are other issues in regard to this PTP and the PFIC that Turbotax also can't handle.

What it amounts to is I should have taken my return to a CPA this year and not tried to do it on my own with TT.  But, I didn't know that until now. So, I've wasted $90 on TT and will have to shell out $375 to my former CPA and have her do my return for 2019.

To those who have stated that Form 8621 is just an information return and that no tax is due from the form, I take issue.  If you have income and/or capital gains from a PTP that invested in a PFIC there is a good probability you owe tax on that income.  I advise you to not rely on TT but consult a competent CPA.  Statute of limitations doesn't apply in this case.  You're on the hook for any tax due plus interest and penalties for failure to report and pay it correctly for all years, if the IRS should do an audit on your return.

"The QEF election involves including the ordinary income and capital gains in the shareholder’s income each year –even if the money was not actually received."

https://www.form8621.com/pfic-taxation/qef-qualified-electing-fund/

I'm simply lost on this and need professional advice, not some tax guru from TT with no training in the subject.

[macintax87]

I second your recommendation to mail the entire return but disagree that one could e-file the rest of the return and mail the 8621. I would not advise e-filing the return then mailing the 8621 separately. The instructions for 8621 below say explicitly "If you are not required to file an income tax return...:

When and Where To File

Attach Form 8621 to the shareholder's tax return (or, if applicable, partnership or exempt organization return) and file both by the due date, including extensions, of the return at the Internal Revenue Service Center where the tax return is required to be filed.

If you are not required to file an income tax return or other return for the tax year, file Form 8621 directly with the Internal Revenue Service Center, Ogden, UT 84201-02

[bryce_in_tx]

Here's what I've done:

(1) I received $12 of income from this PTP that came from the foreign source.  I only received $9 of it in a distribution this year, but IRS instructions say to report the full $12 as income, not just the $9 I received.  I reported this as other income on line 7a of the 1040SR and also on line 8 of Schedule 1.  That amount makes no difference in the tax I owe. 

(2) This amount is totally "immaterial" to my return and the taxes I owe, so getting Form 8621 filled out "perfect" is immaterial. 

(3) So, I've filled out Form 8621 as best I know how and am mailing in the whole (entire) return via USPS mail with 8621attached, also. 

(4) This completes my obligation to the IRS this year, all taxes are paid in full and I've saved myself $375 or more by not taking it to a CPA for a superfluous item. 

(5) I'm a retired non-certified accountant with 2 years experience working for Jackson Hewitt, the last year as a manager, and 10 years doing accounting for 2 publicly traded companies and several private ones.  I feel confident in the decisions I've made for this year's return.

(6) I sold my shares in this company in early 2020 so next year's return is the last year I have to concern myself with this.  No more K-1s for me after this.  I'll look for other investments.

Thanks all for your input on this. It is appreciated.  However, depending on how you choose to report a PTP with foreign earned income, Form 8621 is not always just an informational form.  In my case I had to report foreign earned income on it and the 1040 and be subject to income tax on it.  So be careful.

[fcm1234]

The tax information in my TT does not show the K-1 that I need to file.  I have a business

loss.  This is for a S-1 Corporation.

[DaveF1006]

It depends.  If you have entered K1's for your S-CORP, review them to see which ones have a business loss in Box 1 of the K1's you have reported in your return. Check each one to see if you check the box indicating you did not materially participate in the business.  If you checked this box and have a business loss, you will need to file an 8621.

1. Go to wages and income>S-corps, Partnerships, and Trusts (Business investment and estate/trust income)
2. Schedule K-1
3. Then select S-Corp (Form 1120S) and answer the questions as they appear.
4. Although Turbo Tax does not support 8621, you can download it here. 
5. If you have a business loss, did not materially participate in the business (as indicated by a check mark on the K1), nd need to file a 8621, you ill need to include this and then print and mail your return in. Turbo Tax will give you complete filing and mailing instructions once you complete your return.

@fcm1234