What Are Unreimbursed Partnership Expenses?

 

If you are self-employed in a partnership, your partnership may require you to pay for some expenses out of your own pocket. When you are preparing your personal tax return, you might be able to use these unreimbursed partner expenses to lower your income and self-employment tax bill.

Can I Deduct Unreimbursed Partnership Expenses?

You can deduct unreimbursed partnership expenses (UPE) if you were required to pay partnership expenses personally under the partnership agreement.

Don’t include any expenses you can deduct as an itemized deduction.

Don’t combine these expenses with — or net them against — any other amounts from the partnership. You can’t deduct unreimbursed expenses if you weren’t required to pay them under the partnership agreement.

Also, deductible UPE will reduce your self-employment income.

To deduct UPE:

  • Add another K-1, enter “UPE” as the Partnership name, and enter the total expense as a negative in both Boxes 1 and 14.
  • Answer all other questions the same as on your original K-1, but don’t enter the income amounts again.

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