In late 2021, the IRS announced that it would not begin accepting Schedules K-2 and K-3 until end of March 2022 at the earliest. It also indicated that it would begin accepting these forms for domestic partnerships and S corporations first, before individuals who file Forms 8865.
Given that individuals who file Forms 8865 are last on the list for the rollout of the new forms, individuals who file Form 8865 should plan to file an extension for their individual income tax returns.
If you generally file before April 15, we understand that this can be frustrating.
However, this year, it may behoove you to wait a bit longer—even beyond the earliest date available for filing of the new forms. As of March 2022, the guidance on Schedules K-2 and K-3 was still evolving:
In late January 2022, the IRS updated its guidance and filing instructions for the Schedules K-2 and K-3
In mid-February, the IRS released new Frequently Asked Questions, which contained a number of surprises.
As a result, in March, partnerships and tax practitioners were still seeking additional guidance from the IRS on completion of these forms.
Given the ongoing changes and updates, those can wait a bit longer are expected to have a smoother, most cost-effective process. We expect that filers of Form 8865 will be able to start filing more efficiently around May or June 2022.