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.

Related Topics

Related Resources

What Is an Enrolled Agent or EA?

What does it mean to be an enrolled agent? Learn more about the roles and requirements of enrolled agent (EA) tax preparers at H&R Block.

Am I Eligible For The Lifetime Learning Credit?

Can you claim the Lifetime Learning Credit for continuing education classes? Learn more from the tax experts at H&R Block.

Claiming Parents as Dependents

Review the criteria that could allow you to claim your parents as dependents on your taxes with help from the tax experts at H&R Block.

Non-Dependent Earned Income Tax Credit

Learn whether you can claim a family member who's not your child but who lives with you as a nondependent for EIC purposes with advice from H&R Block.