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

[ohmson]

I just updated TT today and while it allows me to enter *one* K-3 for *one* country, I needed it for other countries. TT just doesn't allow adding of another K-3 for each K-1. Alternatively, TT should allow adding another country for that one K-3.

[wbraden3]

The IRS accepted my return,  where I entered the K-3 listing country as "various" and using totals for the other lines.

Seriously, what's the problem?  Breaking it down by country will not affect my tax liability.  Someday, when the IRS digs its way out of its current backlog, they might send me a letter telling me I did it wrong.  But there's no basis for a penalty here.

[rbs01]

I have completed for Turbotax business 2022 desktop version form 1065, including the K-1 (checked box 16) and K-3s. When I try to e-file it says there is an error in K-1, and wants K-3 complete. However, K-3 is complete. If I try to print the forms, the K-3 does not print and is not visible in the forms to print. However, it is visible in the Forms view and is complete. I I try to print it page by page, the pages do not print properly.

I tried to reach someone at Turbotax and he seemed perplexed (it was not clear he even knew what the K-3 was), and hung up on me.

I could use some help.

[STOKABE]

having the same problem with error checking. TT tells me I need to choose "Other countries" on an item I don't even need to enter.

[PatriciaV]

Is there a check in the box on Line 16 of the K-1 Partner worksheet? If Schedule K-3 is to be attached, this box must be checked.

[zombi12]

Hi All,

Do I need to amend 2021 tax return to include k-3 even though the form is all blank, no foreign activity?

I unchecked box 16 when I filed my return last year. I completely forgot about k-3 until now. I'm not sure I should file an amend.

[GeoffS]

I did the same and relied on the "safe harbor" offered by the IRS for 2021 only. Not sure if I was correct. 

[zombi12]

What do you mean "safe habor" by the IRS. I read and read the exceptions for 2021 and still confuse. 

I'm picking my head should I or should I not the file amend even though no difference since there is nothing foreign K-3. Turbo Tax even prompt the message " there is no change, why do you need to file amend".

@GeoffS

[wbraden3]

The only reason for most of us to file the K-3 is to support a credit, typically the credit for foreign taxes paid.  If you're not claiming a credit, then you're not going to get in trouble for not doing the paperwork.  And if it's really all zeroes, what's the point?  (Apparently the accountant for the partnership is even more obsessive than you are!)

[LindaS5247]

With regard to @zombi12 question, if there is no change to your income or tax due you do not need to file an amended return.

Click here for "Should I file an amended return? From the IRS.  Then lick "Begin" at the bottom of the page.  It will ask you specifics and recommend whether to amend your tax return or not.

Click here for information regarding when to amend your tax return.

With regard to @GeoffS question, I am not sure if you are saying you have the same scenario or not.  Is your K-3 blank?

It is correct for 2021 to 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.

For 2021 the IRS released procedures 

Regarding the IRS "Safe Harbor I believe  @GeoffS is referring to the following:

Notice 2021-39PDF provides penalty relief for good-faith efforts to adopt the new schedules. Today's transition relief, appearing in new frequently asked questions (FAQs) on Schedules K-2 and K-3, allows an additional exception for tax year 2021 filing requirements by certain domestic partnerships and S corporations.

The IRS is providing an additional exception for tax year 2021 to filing the Schedules K-2 and K-3 for certain domestic partnerships and S corporations. To qualify for this exception, the following must be met:

• In tax year 2021, the direct partners in the domestic partnership are not foreign partnerships, foreign corporations, foreign individuals, foreign estates or foreign trusts.
• In tax year 2021, the domestic partnership or S corporation has no foreign activity, including foreign taxes paid or accrued or ownership of assets that generate, have generated or may reasonably expected to generate foreign source income (see section 1.861-9(g)(3)).
• In tax year 2020, the domestic partnership or S corporation did not provide to its partners or shareholders nor did the partners or shareholders request the information regarding (on the form or attachments thereto):
  • Line 16, Form 1065, Schedules K and K-1 (line 14 for Form 1120-S), and
  • Line 20c, Form 1065, Schedules K and K-1 (Controlled Foreign Corporations, Passive Foreign Investment Companies, 1120-F, section 250, section 864(c)(8), section 721(c) partnerships, and section 7874) (line 17d for Form 1120-S).
• The domestic partnership or S corporation has no knowledge that the partners or shareholders are requesting such information for tax year 2021.

To enter a K-3 in TurboTax:

Entering a K-3 in the individual return:

1. Open the Schedule K-1 Worksheet.
2. Scroll down to the Foreign Transactions line: For partners, this is line 16. .
3. Check the Schedule K-3 is attached if checked box.
4. Enter the Name of Country or U.S. Possession.
5. Complete lines B through AI based on the K-3 received.

 Click here for additional information on Form K-3 for 2022.

Click here for guidance issued by the IRS on" relief for certain partnerships preparing Schedule's K-2 and K-3"

[MarilynG1]

The De Minimis Safe Harbor election lets you deduct the full cost of items worth $2,500 or less, instead of depreciating. 

You can also use the Safe Harbor Election for Small Taxpayers to expense the cost of improvements to business buildings if you qualify. These elections are available for Schedule C businesses, rentals, farms, and farm rentals.

Here's more info on Safe Harbor.

@zombi12