I am the co-principal of an LLC. Next year I will be filing the Form 1065 we each will submit a Schedule K-1. How we report rent/utilities expenses for our home offices?

[chug_mama]

I am the co-principal of a two-person limited liability company (LLC). We each operate out of a home office. Next year I will be filing both the Form 1065 (federal U.S. Return of Partnership Income) and 568 (to state Franchise Tax Board) for our company. Each of us will additionally submit a Schedule K-1 with our individual tax returns. We are careful to never intermingle personal and company funds; all company expenses are paid out of our LLC checking account. We were wondering if there are other LLC owners out there who could tell us how you handle reporting of expenses that cannot be practically paid from our company account: the portion of our rent, utilities, and telephone that are for our home offices and that we pay individually out of our personal accounts each month. How should these expenses be reported for our taxes? 

[Critter · Accepted solution]

If you have unreimbursed partnership expenses (UPE) check the box on the screen after your K-1 entries (see screenshot below) and enter the expenses on the following screens.  

[chug_mama]

Hello Critter,

This response is everything we needed and more. Thank you for your helpful answer and screenshots. This seems very simple, and we are clear on how we will report this next year. 

All best,

Chug Mama

[Carl]

This seems very simple,

Wanna bet? 🙂 I suggest you have professional help lined up and scheduled for tax time next year. You'll be glad you did.