![]() Moving forward, applicable filers should start assessing the impact for the next filing season. ![]() Under Notice 2021-39, certain transition penalty relief for tax year 2021 may be granted if the filer makes a good faith effort to comply with the new IRS reporting requirements. ![]() The IRS designed these specific schedules to replace the current reporting for these items (which often occurs on Line 16 and footnotes to K-1s) so that the information provided to owners is delivered in a standard format with an additional level of detail. ![]() The new schedules are intended to provide more transparency and clarity for the owners of pass-through vehicles regarding how to calculate their US income tax liability from relevant international items. Additionally, S corporations with international tax relevance, as well as certain Form 8865 filers, will have similar Schedules K-2 and K-3 filing obligations for tax years beginning in 2021. For tax years beginning in 2021, a partnership must file Schedule K-2 (partners’ total international distributive share items) and Schedule K-3 (partner’s share of international income, deductions, credits, etc.), if the partnership has relevant international tax items. The IRS has released final versions of two new forms that should be added to the tax returns of pass-through entities to report certain international income, deductions, credits, and other miscellaneous items.
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