S corporations and Partnerships use Schedule K-2 to report foreign income or other international tax items when filing Form 1120-S or 1065. In most cases, when you are a shareholder or partner of an entity that files Schedule K-2, you will receive Schedule K-3 detailing your share of those international tax items. You will be prompted to enter the information from Schedule K-3 when entering your S Corporation or Partnership income.
IMPORTANT: TaxAct does not support Parts IV - VII of Schedule K-3. If you received Schedule K-3 with amounts on Parts IV-VII, you will need to paper-file your return with manually prepared schedules.
In the past, foreign income was reported directly on Schedule K-1 (line 14 for S corporations using Form 1120-S, or line 16 for partnerships using Form 1065). Now, those boxes simply show whether a Schedule K-3 is attached, which provides the detailed foreign income information you’ll need to complete your individual tax return.