IRS to Allow E-Filing of New K-2 and K-3 Schedules
This past week the IRS announced it is rolling out the ability to electronically file the new schedules K-2 and K-3 next year, but not at the beginning of filing season. Schedule K-2 (partner Distributive Share Items-International) and K-3 (Partner’s Share of Income, Deduction, Credits, etc. – International are new for the 2021 tax year. These forms will be required to be filed by those who have relevant items of international tax, and filing a Form 1065, Form 1120-S, or Form 8865. The forms are set to become available as follows:
- Form 1065 – March 20, 2022
- Form 1120-S – Mid-June 2022
- Form 8865 – January 2023
These new forms play directly into the IRS’s attempt to crack down and enforce better tax compliance, especially for large partnerships doing international business. The forms are purposed to assist in providing additional transparency when figuring out their U.S. tax liability when it comes to international tax items. For more information on who is required to submit schedules K-2 and K-3, please see the IRS’s schedule instructions, or call for more information.
SALT Cap Discussions
Congressional Democrats have been debating increasing the $10,000 cap on state and local tax deductions. The debate largely pivots on the argument that removing or increasing this cap too much would only benefit the rich, however, many states now have a pass-through entity workaround in place which drastically reduces tax liability. This workaround is making the SALT cap much less effective in collecting state income tax revenue from business owners than before. It does this by taxing the entity first, deducting the income before it is paid out to the business owners. As this action is happening so recently, it will be interesting to see how the government chooses to handle the SALT cap.
Extension of E-Signatures
In addition to electronic signatures being easier and more efficient, they are also extremely secure. DSJ will be utilizing AssureSign, one of the safest softwares for collecting signatures this tax season, which uses the required Knowledge-Based Authentication when filing certain returns!