K-2 and K-3 forms how is turbotax addressing this requirement

[MinhT1 · Accepted solution]

Most forms K-2 and K-3 forms do not need to be filed this year.

The IRS announced on Tuesday February 15, 2022 that most K2/K3 reporting for 2021 can be delayed until the 2022 tax return filing.

This is an extract of the IRS announcement:

The IRS intends to provide certain additional transition relief for this year from the Schedule K-2 and K-3 reporting for certain domestic partnerships and S corporations with no foreign activities, foreign partners or shareholders, and without knowledge of partner or shareholder need for information on items of international relevance. For 2021, these qualifying domestic partnerships and S corporations will not have to file the new schedules. We are taking this step in response to feedback we received from the tax community and our stakeholders.  The IRS will provide full details of this relief soon.

[snackdog]

So my k-1 has box 16 checked -- because my investment club generated a k-3 form. Should I tell Turbo Tax that that box is not checked so I don't get an error during Smart Check?

[PatriciaV · Accepted solution]

Yes, leave Box 16 unchecked since you are not required to report Schedule K-3 for the 2021 tax year. Be sure to retain all info sent with Schedule K-1 in case you need it in the future.

[snackdog]

Thanks -- I will tell the rest of my club members to tell Turbo Tax that box was not checked (even though it was on the K-1).

[redytorace]

Tried to delete response.  Ignore.

[Cactus Jake]

The IRS message of 15 Feb solved the issue for people in partnerships that don't have foreign income, but we who are in partnerships owning ADRs still need to include K-3s with our 1040 returns. 

Currently, TurboTax Deluxe does not support K-3s. When will do so? 

[nrdlik99]

Since our partnership K-1 form has a "foreign taxes paid" entry, I believe we are required to file a K-3 form with our 2021 tax return.  Since I have an electronic file of the K-3 form, is there a way I can add it or insert it into my current Tubotax Federal and State tax return files?  If so I assume that I could file both my returns electronically rather than mail them??

Alan

[dmcmahon1960]

Well, I have a K3 that includes a foreign tax credit. If I uncheck box 16, it seems I don't get the credit. That's not a solution.

[snackdog]

TurboTax should fix this. 

[DaveF1006]

The issuance of a K2/K3 is not a Turbo Tax issue, it is a IRS issue. According to the IRS, this is the release dates for these forms depending your type of Business Entity.

Form 1065                        March 20, 2022

Form 1120-S                     Mid-June 2022

Form 8865                        January 2023

Please verify this at this IRS link.

@snackdog @dmcmahon1960 @nrdlik99  

[snackdog]

Oh do you think there will be a TurboTax update when these are released?

[DaveF1006]

At this time, TurboTax does not have a release date for these forms. Turbo Tax can't implement the forms in the program until released by the IRS. 

@snackdog

[redytorace]

Is there a forecast date for the IRS to provide instructions to 1040 filers who, as I understand it,  are required to submit copies of Form's K-3 with their Form 1040's?

I am concerned about Turbo Tax's direction to uncheck the K-1 box 16, which would incorrectly indicate that the partnership did not provide K-3's to me when it had.

[hbvon1]

DaveF100 posted a 2 step process whereby the tax credit is not lost.  Plus, step 2 (amendment )  addtionaly  alleviates concerns re.  K-2 confusion impacting e-filing.