The IRS has provided an additional exception for qualified domestic partnerships and S corporations to file their schedules K-2 and K-3 for tax year 2021 to further ease the transition to these new schedules. The new schedules standardize international tax information to partners and flow-through investors while clarifying obligations and standardizing the reporting format.
Simply put, eligible entities, those with no foreign activities, foreign partners or shareholders, and without knowledge of partners or shareholders needing information on items of international relevance, will not have to file the new Schedules K-2 and K-3 for tax year 2021.
To qualify for this exception, partnerships and S corps must meet the following:
If a partnership or S corporation qualifies for this exception, it does not need to file Schedules K-2 and K-3 with the IRS or its partners or shareholders. However, if a partner or shareholder notifies the partnership or S corporation that all or part of the information contained on Schedule K-3 is needed to complete their tax return, the partnership or S corporation must provide the information to the partner or shareholder.
If a partner or shareholder notifies the partnership or S corporation before the partnership or S corporation files its return, the partnership or S corporation must provide the Schedule K-3 to the partner or shareholder and file the Schedules K-2 and K-3 with the IRS.
Click here to read the IRS notice regarding the relief options. More information can be found in the IRS’ updated Schedule K-2 and K-3 frequently asked questions. Please get in touch with our office today if you need help navigating this new relief or completing your schedules K-2 and K-3.
Receive Free financial tips & Tax Alerts!
The State of California now requires businesses with five or more employees to either offer an employee retirement plan or participate in the CalSavers Retirement Savings Program by June 30,…
California enacted Assembly Bill 150 (“AB 150”) in late 2021 as a method for deducting state and local taxes in excess of federal deduction limitations. AB 150 allowed passthrough entities…
The IRS recently released guidance providing the 2023 inflation-adjusted amounts for Health Savings Accounts (HSAs). High inflation rates will result in next year’s amounts being increased more than they have…