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IRSCorporate Tax (1120 Series)

Official form guide

Form 1120SK2: 1120-S (Schedule K-2)

Form 1120‑S Schedule K‑2 reports a corporation’s international tax items that flow to shareholders. It is filed with the corporation’s Form 1120‑S for the tax year in which the items arise.

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Form Overview

IRS Form 1120SK2 - 1120-S (Schedule K-2)

Form 1120‑S Schedule K‑2 reports a corporation’s international tax items that flow to shareholders. It is filed with the corporation’s Form 1120‑S for the tax year in which the items arise.

It captures foreign income, foreign taxes, foreign tax credits, withholding, and other international items that pass through to shareholders.

Risk Radar

Scan points
  • 1A single mis‑reported foreign tax credit can invalidate every shareholder’s K‑1.
  • 2Missing foreign tax credit amounts
  • 3Incorrect currency conversion rates
  • 4Omitting foreign withholding tax entries
  • 5Mismatched totals between K‑2 and K‑1

Plain English

If your S corporation has foreign income, taxes paid abroad, or other cross‑border items, you must fill out Schedule K‑2. The schedule tells the IRS how those international items affect each shareholder’s personal return.

Submission Date

  • Filing date: 2026-01-09 16:10:40
  • Preparation window: collect IDs, supporting records, and signatures in advance.
  • Final review: verify names, dates, and required fields before submission.

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Glossary Terms

foreignincome

Hover a term to preview the meaning.

What this form is for

  • Use when the S corp has any foreign source income or paid foreign taxes.
  • Do not use if the corporation has no international items; attach a statement of no foreign activity instead.
  • If the corporation has only passive foreign investment income, consider Schedule K‑3 instead.

Form selector

Use this form or another form?

Only domestic activity

No international items to report

✓ Verify no foreign income before omitting K‑2

Form 1120‑S (no K‑2)

Foreign partnership interest

Partnership, not corporation

✓ Use partnership schedule, not corporate

Form 1065 Schedule K‑2

Foreign corporation owned > 25%

Ownership reporting requirement

✓ File 5471 in addition to K‑2

Form 5471

Deadline or filing window

Schedule K‑2 follows the Form 1120‑S deadline. For calendar‑year corporations, the filing deadline is March 15, with automatic 6‑month extensions available if Form 4868 is filed. Extensions apply to the schedule as well. Late filing may incur penalties.

  • —Foreign income (USD) | Sum of foreign source revenue converted at yearly average rate | Total foreign income | Use IRS Table 1 rates
  • —Foreign tax paid (USD) | Sum of foreign taxes withheld + paid, converted at yearly average rate | Total foreign tax | Verify documentation

Checklist

What you need before filling it out

1

Line 1 – Foreign gross income

Foreign bank statements, foreign sales invoices · Corporate ledger

⚠ Forgetting to include all foreign subsidiaries✕ High
2

Line 3 – Foreign taxes paid

Foreign tax returns, withholding statements · Tax department records

⚠ Using gross instead of net tax paid✕ Medium
3

Line 5 – Credit carryovers

Prior year K‑2 schedules, credit carryover worksheets · Prior year returns

⚠ Omitting carryovers✕ Medium
4

Line 7 – Currency conversion

IRS yearly average exchange rate tables · Treasury website

⚠ Using spot rate instead of average✕ Low

Before you submit

  1. 1Confirm corporation has at least one international tax item.
  2. 2Reconcile totals with the corporation’s Form 1120‑S.
  3. 3Verify all currency conversions use the correct IRS average rate.
  4. 4Attach supporting foreign tax documents to the return.
  5. 5Ensure each shareholder’s Schedule K‑1 reflects the K‑2 amounts.
  6. 6Check that the authorized officer has signed the schedule.
  7. 7If filing electronically, confirm the software attached the schedule.
  8. 8Retain a copy of the completed Schedule K‑2 for corporate records.

How to file this form

  1. 1Prepare Form 1120‑S draft.
  2. 2Gather all foreign income and tax documents for the year.
  3. 3Complete Schedule K‑2 using the gathered data.
  4. 4Transfer totals to each shareholder’s Schedule K‑1.
  5. 5Review the entire return for consistency and sign.
  6. 6Attach Schedule K‑2 behind the 1120‑S (paper) or upload (e‑file).
  7. 7Mail or transmit the package to the IRS by the deadline.

Known limitations

  1. 1IRS instructions do not provide a built‑in calculator; users must compute conversions manually.
  2. 2Only foreign items that flow through to shareholders are reported; some foreign activities require separate forms (e.g., 5471).
  3. 3The schedule does not capture foreign branch assets—those belong on Form 5471 or 8865.
  4. 4Electronic filing support varies by software; not all providers handle Schedule K‑2 yet.

Field map

Compact field-by-field guide

9 fields

Entity Info

2 items

Corporation Name and EIN

Full legal name of the corporation and its Employer Identification Number.

Requiredtext
Address and Date Incorporated

Current mailing address and date of incorporation.

Requiredtext

Income

3 items

Gross Receipts or Sales

Total revenue from business operations before deducting costs.

Requiredamount
Cost of Goods Sold

Direct costs attributable to producing goods sold by the corporation.

amount
Total Income

Gross receipts minus cost of goods sold and returns/allowances.

Requiredamount

Deductions

1 items

Total Deductions

Sum of all business expenses including compensation, rent, interest, taxes, and depreciation.

Requiredamount

Tax

2 items

Taxable Income

Total income minus total deductions.

Requiredamount
Total Tax

Tax calculated on taxable income using the applicable corporate tax rate, minus any credits.

Requiredamount

Signatures

1 items

Officer Signature

An authorized corporate officer must sign and date the return.

Requiredsignature
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Current form status
IRS

The latest revision of Schedule K‑2 is for tax year 2023, issued with Form 1120‑S Revision 2024. Check the IRS website for any interim updates before filing.

What changed or needs a fresh check

  • Edition date: Verify the schedule is the 2024 revision (effective for 2023 tax year).
  • Fee: No separate filing fee; included with Form 1120‑S.
  • Mailing address: Use the address for the corporation’s Form 1120‑S filing location.
  • Electronic filing: Ensure the e‑file software supports Schedule K‑2 attachment.
  • Signature line: Must be signed by an authorized corporate officer.

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Quick Facts

All S corporations that have reportable international tax items must file Schedule K‑2.
It captures foreign income, foreign taxes, foreign tax credits, withholding, and other international items that pass through to shareholders.
Schedule K‑2 is due when the corporation’s Form 1120‑S is due, generally the 15th day of the third month after the tax year ends (March 15 for calendar‑year filers).
File it together with Form 1120‑S. If filing electronically, attach the schedule in the e‑file package; if paper, staple it behind the 1120‑S return and mail to the IRS processing center for the corporation’s location.
Errors can cause incorrect shareholder K‑1 amounts, lead to denied foreign tax credits, or trigger penalties for under‑payment of tax.
Gather all foreign‑related financial statements for the year. Complete Schedule K‑2 line‑by‑line using the corporation’s books and any foreign tax documents. Transfer totals to Schedule K‑1 for each shareholder. Review totals against the corporation’s Form 1120‑S. Attach and file.

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After you file

  1. 1Keep a signed copy of Schedule K‑2 with corporate records for at least 7 years.
  2. 2Provide each shareholder with the updated Schedule K‑1 reflecting the K‑2 data.
  3. 3Monitor IRS notices for any adjustments to foreign tax credit calculations.
  4. 4If an amendment is needed, file Form 1120‑S X with a corrected Schedule K‑2.
  5. 5Update the corporation’s foreign tax credit carryover schedule for the next year.
  6. 6Reconcile any differences between the corporation’s foreign tax paid and the shareholders’ credits.

Sources

  • SRCIRS Form 1120‑S InstructionsSchedule K‑2 section
  • SRCIRS Publication 514Foreign Tax Credit (for conversion rates)
  • SRCIRS Revenue Procedure 2023‑45Update to Schedule K‑2 for 2023 tax year
  • SRCIRS websiteCurrent edition date for Schedule K‑2 (2024 revision)
  • SRCIRS e‑File specificationsAttachment rules for Schedule K‑2
  • SRCNot clearly stated in the provided official source

Common confusion points

K‑2 vs K‑3

K‑2 reports items that flow through; K‑3 reports items that do not flow through

→ Verify the flow‑through nature before choosing

Currency conversion method

Some filers use spot rates, IRS requires yearly average

→ Check IRS Table 1 for the correct rate

Who signs

Some think the tax preparer signs; IRS requires an officer of the corporation

→ Confirm officer signature

Foreign tax credit vs deduction

Credit is a dollar‑for‑dollar offset, deduction reduces taxable income

→ Ensure the correct line is used

Carryover calculations

Carryovers are easy to miss when switching software

→ Re‑run prior year schedules to confirm

Workflow map

Related forms and next steps

6 signals

Before

Form 1120‑S (main corporate return)

Current

1120SK2

After

Form 1116 (shareholder foreign tax credit claim)

Often used with

Schedule K‑1 (shareholder allocation)Schedule K‑3 (if non‑flow‑through foreign items exist)

⚠ If something goes wrong

  • Form 1120‑S X (amended corporate return)
  • Form 1065 Schedule K‑2

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Public DomainCreated by the U.S. federal government. Not subject to copyright (17 USC § 105). Freely copyable without restriction.
Public DomainCreated by the U.S. federal government. Not subject to copyright (17 USC § 105). Freely copyable without restriction.
Public DomainCreated by the U.S. federal government. Not subject to copyright (17 USC § 105). Freely copyable without restriction.
Public DomainCreated by the U.S. federal government. Not subject to copyright (17 USC § 105). Freely copyable without restriction.
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