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

In the interview section for Schedule K-3, TurboTax is asking for the foreign country for which you are reporting foreign activities. The detail questions have boxes for columns B-G only, but not column A (US-sourced). Do you receive an error if you do not enter anything for column A?

Thanks PatriciaV.   I think TurboTax only partially created the K-3 electronically for only foreign derived income, not for all incomes.  In my case, as a passive investor in a partnership, I have only received US based income and zero foreign income.  K-3 is for all income, including US source income. 

 

Here are some issues:

 

TurboTax interview asked Foreign Country or US Possession, what do I select?  Do I select "not applicable" since US is not among the choice? Alternatively TurboTax in K-3 should have two entries for Box16 - if Box 16 in K-1 is checked with foreign income, OR if Box 16 in K-1 is checked with only US income; if you select the former, you continue to fill out the K-3 in TurboTax, and if you select the latter, you stop.  That would be a fix to the bug.

 

When prompted to Enter gross income information, there is no Column A box for US income, but there is a Column G total for "Foreign Gross Income - Gross Income from all sources", should I enter US total in this column or leave it blank?

 

If I cannot enter US or any US source income in TurboTax version of K-3, then what do I do?

 

Another fix for the TurboTax bug is to add US as a choice in country selection and also add Box (a) for US income source in each column. This will be consistent with the IRS form K-3.  Thus I think that it is a bug in TurboTax software.  

 

If you have other creative fix, please advice and think many will benefit from the expert guidance.  Appreciate very much.

 

When I select "not applicable" when the interview question asks about foreign country or US possession, it still gives me error. There is no where in K-3 in TurboTax you can indicate that although K-3 box is checked, I had only US based income/loss.  Thus this has to be a bug.

Thank you for asking this question.  I am having the same issue.  My K-3 shows gross rental real estate income from the U.S. only.  No foreign income.  What is reported on the K-3 as a net income (loss) has already been reported on the K-1 Box 2 in the same amount as a net rental real estate income (loss).  Does this mean that the U.S. amount that should be reported on the K-3 has already been reported on the K-1?

When passive partnership issued K-3's only have US based income and the tax payers receiving them do not have to file Form 1116 (some may be eligible to claim foreign tax credit on Schedule 3), I do not see any option other than uncheck Box 16 in TurboxTax when entering information for K-1.  Otherwise, TurboTax review will always show error.

 

The best solution in my view is TurboTax fixes this bug by adding one more interview question:

"If your K-1 have only US income/loss and you do not have to file Form 1116 to claim foreign tax credits, please check this box" and then by passing all entries and end K-3 part.  This will solve the problem.

 

If anyone has any better ideas, please advice.  

I'm having the same issues as others. My K-3 only has US sourced income and TurboTax does not allow me to enter US. It seems a simple fix, just add US to the pull-down list, otherwise I cannot enter my K-3 and am stuck.

 

I spent 2 hours on a tech support call who finally suggested I lie about box 16 on my K-1 to avoid entering my K-3 altogether, but that seems poor and possibly illegal advice...to lie on a government form?

 

Please, just add US to the list of possible entries on the Interview form...

@PatriciaV  Can you give us any update on TurboTax intentions to fix the above mentioned bugs and inconsistencies in the new K-3 form? And when?

 

I would have PMd you, but apparently we are not allowed to PM TurboTax employees...

The issues with the K-3 stem from the IRS themselves.  You can still file your return by unchecking the K-3 box, but you might have to file an amendment when the K-3 is available.  The IRS announced on February 15, 2022, that most K2/K3 reporting for 2021 can be delayed until the 2022 tax return filing, but they have not reported how taxpayers should proceed.  

 

Per the IRS:

 

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.

 

@Tax2019Pay

@Joan60

@Gene357

 

Hi @AliciaP1 ,

 

Thanks for the update, though I had seen that prior to the buggy K-3 form being added.

 

From a paying software customer perspective, we are being placed in a very uncomfortable filing position, especially since the IRS has not yet given official advise for us taxpayers. As mere citizen taxpayers, it seems unlikely we can do anything individually get the IRS to offer specific taxpayer advice.

 

As an official eFile provider/partner with the IRS, has TurboTax raised these specific issues with the IRS? Any response?

 

thanks!

 

Hi AliciaP1: I am not sure that I can agree with you. The K-3 form that IRS issued has no problem.  TurboTax truncated the form electronically, removed Column (a) entries, and did not allow the selection of US as a country.  If TurboTax inputs the entire K-3 exactly like the IRS K-3 into any relevant TurboTax version, the issue should go away.  After several customers raised this concern, there seems to be long silence from TurboTax. We all want to do the right thing to submit right information to IRS, why can't TurboTax do this simple fix?  Or alternatively TurboTax can add a selection (if you do not have any foreign income in K-3 and you do not need to file Form 1116, you can bypass the rest of K-3 - when you run review, errors will go away - it is even a simpler solution).  I just hope that TurboTax can fix this in the next few days as the deadline for tax filing is due very soon.

Hello @AliciaP1 and @PatriciaV,

 

Do you disagree with @Tax2019Pay that there is a bug in the TurboTax implementation of the K-3 form from the IRS?

 

If you disagree, that seems you are asserting that the IRS K-3 eFile form is wrong.. As an official eFile provider/partner with the IRS, has TurboTax raised these specific issues with the IRS? Any response?

 

If you do not disagree, do you have access to Developers? Have you shared this issue with them? Have the Devs shared a response and ETA of a fix?

 

It appears TT makes it almost impossible to report actual software bugs. Are we wasting our time pointing out bugs here? Do you have a better suggestion?

 

I looked through the "Expert" section. Plenty of Tax experts, but no developers apparently. Trying loop in a few other possibly relevant experts and one Champ/SuperUser who I noticed seems fairly knowledgeable...

Sorry for the semi-spam, but this issue needs some attention...

@DavidD66 

@RobertB4444 

@JohnB5677 

@DianeW777 

@JohnW152

@LoganathanB

@xmasbaby0

Uncheck block 16 on K-1 and proceed without the K-3.

I have tried unchecking Box 16, but I am still getting the error and have run out of options on how to get rid of it so I have some hope of filing on time.  Thx!

Did you import the K-1? Try going to the Form View and enter the data directly on the form.

I entered my data manually. I have looked through the forms and can’t figure out where to make the changes. I have put -0- in the foreign income box but it does not accept that. 

Success!!! I went back in today and walked through the K-1 form, confirmed that Box 16 was NOT checked, and made sure there were no boxes of any kind in Box 16 that were checked, or had amounts, including -0- in them.  That seemed to take care of it for me because the Fed Review came back clean this time.  Ironically, the only box that was checked before I went in was claiming any foreign tax paid as a credit on the return.  I didn't need that, so I unchecked it and I am good to go.

 

Thanks for the suggestion.  

My K-1 has box 16 checked... with only US sourced income reported on the K-3. Here's how I entered the info into Turbo Tax Premier and passed the review without any errors.

 

* Is box 16 checked on your K-1? [Yes]
* ...enter foreign country for which you are reporting foreign taxes paid or accrued. [(Not Applicable)]
*Enter gross income information. [my K-3 only has info in column A(US source) and G(total), but there is no entry block for A so only entered info for G. Since B-F are left empty it is implied that all of the total(G) is US Sourced.]

 

I hope this helps someone.

@leewilson4416 

Thank you so much! It made sense now and solved my problem. 

Dumb question... My K-1 check box for Foreign Transactions (and a K-3) is box 14, yet this post keeps saying box 16. Did the form change or am I missing something? 

 

I do have the same issue where I only have US entries... which isn't an option in TurboTax. I'm hearing that I don't check this box 14--assuming the form has changed.

I'm not sure if we are talking about the same thing. The standard K1 box 14 should be ( Self-employment earnings ) and Box 16 is a check box if you have attached a K3 form. 

Hi @PatriciaV  - There is another aspect to this:

I have a Windows desktop version of TT Premier - and in the step-by-step, when I come to the place of entering K-3 Part II, Sec 1, Ln 24 - i.e. the summary line, TT's column name and title do not match for (g) in my received K-3  or the IRS's website form K-3.

TT calls col (g) Foreign Gross Income - Gross Income from all sources,

whereas

standard IRS (and my partnership) calls it "Total", and the way the partnership has computed the value, it implies that includes Foreign and US Sourced Income

.

I am sure you can appreciate the difference in the implications. 
(I just downloaded the latest version of the TT update) . 

Is this a bug? Or should I ignore entering col (g) in TT altogether? Pls advise 

Going further to the next page in the step-by-step (

Enter Deduction Information

) , the col names do not match for cols (IRS's) F and G.

TT refers to both of them as cols F and F

. 

TT calls the first F Interest Expense

while

IRS calls it Sourced by Partner;

 and

TT calls the 2nd F as Other

,

while IRS calls it Total

.  Implies something very different, Right?

Unless TT forgot to say that the cols B through E are from Line 54, whereas 1st F is the total of col F in lines 39-43, and 2nd F is from Line 54 col F less the 1stF.  

If my assumption is right, the Language on this page and the Help text leaves a lot to be desired. 

Thanks 

I have a relevant question. TurboTax is asking to select a Country on line 24 Section 1 Schedule K-3.

How do I enter several countries there? I have 3 lines (A, B, C) with 3 different country codes on my Schedule K-3. All of them report only one type of income (passive category income column (c) ).

 

Should I simply sum the numbers and select 'not applicable' in the Country selection?

Since you have a summary row in line 24 - you can select Various as the Country. 

Same issue:

 

Line 24 Schedule K-3: TT calls column (g) 

Foreign Gross Income - Gross Income from all sources 

while my K-3 states (g)

Total

which in fact includes value from (a) U.S. source.

 

Should I enter the Total value from my K-3 or Does TT want only Foreign total excluding U.S. source?

 

@PatriciaV Please help us here