TurboTax Newly added K-3 has a bug - need fixing

[rhiga68]

This is March 12, 2023 and the error still exist and I am not sure how to enter U.S. income on column A as it doesn't exist. If anyone has a work around, I would appreciate an answer

[PatriciaV]

If you read the IRS Partnership Instructions for Schedules K2 and K3, you will find that the issuing company can wait as long as one month after the filing deadline to decide IF Schedule K-3 must be issued. In most cases, the information on Schedule K-3 has little to no effect on a personal tax return. We continue to advise taxpayers to either file now and amend later or request an extension of time to file.

Several posts on this thread propose work-arounds for entry issues, including using "Other" for any US-sourced income. We are not aware of any pending updates to Schedule K-3 for the 2022 tax year.

[natebarto]

The "Other" option is not available to me, and "(not applicable)" option removes column A.

Seems like this issue has been going on for over a year, with little attention from TT.

Please help.

[PatriciaV]

The drop-down for Name of Country includes "various" and "XX," both of which are accepted with no errors.

@natebarto 

[Ron L L]

2023-03-14 - Home and Business version 22.000.0471

The "Other" option is not available

(a) U.S. Source is also not available.

(g) Total is mislabeled.

"drop-down for Name of Country includes "various" and "XX" " these are also NOT available.

[PatriciaV]

When entering Schedule K-1 (1065) in TurboTax Home & Business, after you check Box 16, for look for the page "Enter info from your Schedule K-3." 

Under Foreign Country or US Possession, the drop-down box includes "XX" after Zimbabwe. 

"Various" appears near the top of the list after 951A. 

Either of these two choices can be used for sources that are not on the list.

Your other option is to use Forms Mode to open the K-1 Partner form for this partnership and use the drop-down at the beginning of the Foreign Transactions Smart Worksheet under Box 16.

For Schedule K-1 (1120-S), only "Various" is available in the drop-down, again appearing under 951A.

See attached screenshot.

[ANDY012408]

Hello:  My schedule k-1 says attached K-3 but not received and it is not available online any advice please?

i think the reason K -3 is not available is because i bought is in 2022.

as i checked online last time the company provided 2021 schedule. K-3 is in September 2022

so, if i bought those funds in 2022 then the K-3 for 2022 is not available until September 2023.

if that is the case, they should not check mark on my k-1. Any advice? 

 

[ambellnj]

I am trying to enter the Schedule K-3 information for my client. There is no place to input the US; just various. Also, there is no place to input the total income from column g for the income or deductions. How do I do this? This is awful that TT knew about this since last year and still haven't fixed it. This is frustrating and will now have to start all over using a different platform, since TT cannot find a work around. Any guidance would be appreciated.

[ambellnj]

For me, it is Box 14 to check for a schedule K3, not box 14. Please advise.

[PatriciaV]

It depends what version of Schedule K-3 you have. Sch K-3 (1065) reports foreign transactions on Box 16. Sch K-3 (1120S) uses Box 14. 

In both cases, the only option to report US sourced foreign activity is "Various."

Column G (Total) is calculated from all Schedules K-3 entered on the return. This value appears on the e-filed form but isn't shown in Forms Mode.

@ambellnj 

[ambellnj]

Ok so where do you put the deductions? I put the income in under various and put the deductions under other but TT is asking me to review it. Where do the deductions go?

[PatriciaV]

Deductions are entered on lines I (Interest Expense) through O (Other).

What is TurboTax asking you to review? Does a form pop up? Are any fields highlighted in red?
 

@ambellnj 

[ambellnj]

Patricia,

My client's K-3 references income from US sources only, which you told me to pick various for that. Then, for the expenses (deductions) they are on Part II line 26a. Where do I enter the deductions? If I put them in other, it makes me go back to the form to review and says that is incorrect. I need to show income and deductions/expenses. Again, not foreign, just US. Do I need to enter these at all or uncheck Box 14 on the K-1 and not enter the K-3 information at all? This is very confusing and needs to be fixed. Thank you.

[JohnB5677]

There is a New exception to completing Schedule K-3.

“Under a new exception, in certain cases, partnerships with no or limited foreign activity are not required to furnish Schedule K-3 to you for tax years beginning in 2022. See Domestic Filing Exception in the Partnership Instructions for Schedules K-2 and K-3 (Form 1065)."  New exception to completing Schedule K-3

Also see:  Domestic filing exception (exception to filing Schedules K-2 and K-3)

If you choose to uncheck the K-3 box, I suggest filing a Form 8275.

Form 8275 is used by taxpayers and tax return preparers to disclose items or positions, except those taken contrary to a regulation, that are not otherwise adequately disclosed on a tax return to avoid certain penalties.

Form 8275 is not supported by TurboTax, and it cannot be Efiled.  However, you can mail your return and use the link below to prepare the 8275.
Please see About Form 8275, Disclosure Statement for instructions and the FORM.

 Your Federal tax return goes to a different location depending on the state that you live in.  See this list to determine the location for you. Where to File Paper Tax Returns (irs.gov)

  If this does not completely answer your question, please contact us again and provide some additional details.

@ambellnj 
 

[Gene357]

@JohnB5677  & @PatriciaV ,

For the second year in a row, TTax has made a mess of the K-3.  

No one "chooses" to uncheck the K-3 box. They do this because the provided K-3 form simply does not work correctly and unchecking the K-3 box is the advice we get from the TTax support folks.

Now this new requirement, additionally unsupported by TTax, negates most of the advantages of using TTax in the first place.

Please stop all of the deflections and equivocating and just fix the form K-3. This forum is the only mechanism customers have to register bugs, and 2 years in a row the same bugs remain.

--gene