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I've taken multiple seminars for the 2023 filing season. The IRS election exception is very difficult to meet, so ALL seminar presenters advised to just file the K-2 & K-3 even if it doesn't have anything on it.
What do we need to do in the software to accomplish this? I have many small partnerships and s-corps that don't have any foreign activity, but I have just a few that I don't prepare the 1040s for the partners and s-corp members. If they pay >$300 in foreign taxes, the exception doesn't apply and the K-2 K-3 must be filed. There is no way to know if the other partners have >$300 in foreign taxes, so filing the K-2 K-3 (even with $0s) should cover us.
I understand this is early in the filing season, but I wanted to get this out there so the programmers can get everything correct.
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You should notify all shareholders about the K2 - K3 filings and request they respond to you whether they require filing Form 1116. I was able to send a statement to all Partners and Shareholders last December and am now waiting on responses from them. I see it problematic to file Blank K2's and K3's amounts still need to be entered.
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Unfortunately I haven't found much help to properly complete these correctly from the numerous seminars I have attended. I will probably have to no longer file returns for certain clients or risk penalties.
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If you review the K-2 you will see that you report both US information and Foreign information. So, unless the partnership has no income or expenses, you have information to report.
