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How to enter foreign taxes paid on form 1120S in Lacerte

by Lacerte Tax 2023 Updated 10 months ago

Starting in tax year 2021 the IRS updated the Schedule K-1 to include Schedule K-2 and Schedule K-3 to show International Transactions. This K-2 replaces the inputs prior tax years. See Generating the Schedules K-2 and K-3 in Lacerte for information on completing these new Schedules.

Follow these steps to enter foreign taxes for Schedule K, line 16f:

  1. Go to Screen 27, Other Schedule K Items.
  2. Scroll down to the Items Affecting Shareholder Basis section.
  3. Enter the amount of Foreign taxes paid or accrued.

The S corporation must complete Schedule K-2, Parts II and III. See How to generate the K-2 and K-3 in Lacerte for instructions.

  1. Go to Screen 27, Other Schedule K Items.
  2. Locate the Foreign Transactions section.
  3. Select the Foreign country from the drop down menu. (Schedule K, line 14a)

  4. Complete all applicable information:
    • Gross income from all sources (Schedule K, line 14b)
    • Gross income sourced at shareholder level (Schedule K, line 14c)
    • Foreign Gross Income Sources at Corporate Level subsection (Schedule K, line 14d-14f)
    • Deductions Allocated & Apportioned at Shareholder Level subsection (Schedule K, line 14g-14h)
    • Deductions Allocated & Apportioned at Corporate Level subsection (Schedule K, line 14i-14k)
    • Foreign taxes paid (Schedule K, line 14l)

View the results on the Schedule K, Line 14a-q.

Verify the allocations to each shareholder on the Schedule K-1, box 14.

Note: The Lacerte program only allows input for one foreign country.  If the S Corporation had income from, or paid or accrued taxes to, more than one country or U.S. possession, a statement is required to be attached.  In order to correctly file the return, enter the aggregate amounts of all foreign transactions in Screen 27, Other Schedule K Items with the country as Various   Then manually create separate statements for the Schedule K (use Screen 39,Notes) and each Schedule K-1 (use Screen 34,Supplemental Info. (per S/H)).

Lacerte Tax

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