Schedule K-1 (Form 1065) and Schedule K-3 are related IRS forms, but they serve different purposes and report different types of information.
This page explains the difference between Schedule K-1 and Schedule K-3, when each form is used, and why some partners receive both forms, based on official IRS instructions.
For a general explanation of Schedule K-1, see Schedule K-1 (Form 1065): Overview.
What Schedule K-1 (Form 1065) Reports
Schedule K-1 (Form 1065) reports each partner’s distributive share of partnership income, deductions, credits, and other tax items for the tax year.
It is issued to every partner of a partnership or LLC taxed as a partnership and is required regardless of whether the partnership has foreign activities.
What Schedule K-3 Reports
Schedule K-3 is used to report international tax information related to a partnership.
According to IRS instructions, Schedule K-3 provides detailed information about:
- Foreign income
- Foreign taxes paid or accrued
- International transactions
- Information needed to complete foreign tax credit calculations
Schedule K-3 does not replace Schedule K-1. It supplements it.
How Schedule K-1 and Schedule K-3 Work Together
When a partnership has international activity, information that was previously included directly on Schedule K-1 may instead be reported on Schedule K-3.
In these cases:
- Schedule K-1 reports domestic and summary partnership items
- Schedule K-3 provides additional international details
- Partners may need both forms to complete their tax returns
Who Receives Schedule K-3
Not all partners receive Schedule K-3.
A partnership issues Schedule K-3 only if it has items related to international tax reporting or if the information is required for partners to complete their returns.
Partners with no foreign tax reporting requirements may receive Schedule K-1 without Schedule K-3.
Do You Always Receive Schedule K-3 With Schedule K-1?
No. Schedule K-3 is issued only when applicable.
If a partnership has no international activity, Schedule K-3 may not be prepared or distributed.
However, if foreign income, foreign taxes, or international transactions exist, partners may receive Schedule K-3 separately or together with Schedule K-1.
Why Schedule K-3 Is Often Issued Later
Schedule K-3 is frequently issued after Schedule K-1.
This occurs because international tax information is often more complex and may require additional calculations or data from foreign sources.
As a result, partners may receive Schedule K-1 first and Schedule K-3 at a later date.
How Partners Use Schedule K-3 Information
Partners use information from Schedule K-3 to complete portions of their tax returns related to foreign income and foreign tax credits.
Depending on the situation, this information may be used to complete forms related to international tax reporting.
Related Situations and Guides
- When Do You Receive Schedule K-1?
- Schedule K-1 for LLC Members
- Do You Need to File If Schedule K-1 Shows No Income?
Official Forms
The official IRS forms related to this topic are available here: