This question is asked frequently during tax season.
I suspect it will be asked even more this tax season.
There will likely be even more delays this year than in past years. Congress passed The American Taxpayer Relief Act of 2012 on the last day of 2012. President Obama signed this legislation on January 2, 2013. This has delayed the IRS, which will delay tax preparers.
K-1’s are issued by the following entities:
* Subchapter S Corporations – Form 1120S K-1
* Partnerships – Form 1065 K-1
* Limited Liability Companies (“LLC’s”) – Form 1065 K-1
* Estates and Trusts – Form 1041 K-1
Most of these entities have a calendar tax year and Form K-1 is due by April 15th. If the return for which a Form K-1 is generated can’t be filed on time an extension can be filed. This extension will extend the time to file the return to September 15th. The issue is that your personal income tax return is also due April 15th.
The Process
Don’t wait for your K-1 to meet with your CPA. Pull together all of your tax material and schedule an appointment with your CPA. If you have your K-1’s great. If not, don’t worry about it. You will want to have the return materially completed except for any outstanding K-1’s. Assuming the K-1 arrives before April 15th, you should be able to complete and file your return.
Filing an Extension
If you have not received your K-1 before your return is due, you will need to file an extension. Last week we explained 3 Proven Reasons Why You Should Be Prepared to Go on Extension This Year. This is done on Form 4868. The extension will extend the time to file your return to October 15th. The extension only extends the time to file the return. It does not extend the time to pay the tax. If tax is due, it needs to be paid by April 15th. Failure to pay the tax on time will result in interest and penalty. Most states will also require an extension to be filed. In Connecticut this is done on Form CT-1040-EXT.
Although I wouldn’t recommend it, you could file on time without the K-1. When you received the K-1 you will have to amend your return. This is done on Form 1040-X. Having to prepare and file an amended return is more paperwork and increases your tax preparation fees.
Are you prepared to potentially receive your K-1 even later this year?
Please leave your comments below.
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Tom Scanlon has over thirty years experience in public accounting with an extensive background in the areas of financial, tax, and estate planning. He prides himself on providing in-depth and customized solutions to privately held businesses and their owners. He is a Certified Public Accountant and Certified Financial Planner®. Tom is a frequent speaker for area organizations and has recently been quoted on CNBC, Fox 61 News and AARP's blog. Tom also has been a guest columnist for numerous publications including The Wall Street Journal, Barron's, Money Magazine, The Hartford Courant, The Hartford Business Journal, and The New Haven Register. He is a member of the American Institute of Certified Public Accountants, the Connecticut Society of Certified Public Accountants, and the Financial Planning Association. Active in the community, Tom supports a variety of not-for-profit organizations.
