I have Excess business interest expense in box 13K on my K1 (form 1065). How does this affect my personal tax return? Can I dedcut it? Thank you!

[PatriciaV]

If you are able to deduct the business interest expense reported on Schedule K-1, the expense may reduce your taxable income.

According to IRS Instructions for Form 1065 Schedule K-1 Box 13 Code K. Excess business interest expense (EBIE): "If the partnership reports EBIE to the partner, the partner is required to file Form 8990. See the Instructions for Form 8990 for additional information."

Form 8990 is used to figure the amount of business interest expense you can deduct and the amount to carry forward to the next year. This form is not supported by TurboTax. You'll need to use this IRS link to download the form and complete it manually. To include it with return, you will need to print and mail your federal tax return.

[davidxbwang]

Thank you, Patricia. If I use the form 8990 to carryforward business interest expense to the next year, how can I use this business interest expense carryforward to deduct my tax next year? Can you please explain? Thank you!

[PatriciaV · Accepted solution]

Next year, you'll complete Form 8990 and repeat in future years until you can claim all the excess business interest expense. This is a complicated issue that may or may not be worth your effort. You may wish to consult a local tax professional with partnership experience to advise you how to proceed.

[davidxbwang]

Thank you

[davidxbwang]

@PatriciaV I have filled in the form 8990 and I have a number(e.g. $1000) at line 30 Total current year business interest expense deduction. Where can I use this line 30 number ($1000) on my 1040 form? Thank you.

[PatriciaV]

This interest may qualify as investment interest expense, which is limited to the amount of net investment income you earned for the year. You report investment interest expense in the section Retirement and Investments. Proceed through that section, reading all the information provided and making all the necessary entries. The interest expense will be reported on Schedule A as an itemized deduction.

Be sure to include Form 8990 with your return if you mail it. Otherwise, attach Form 8453 to Form 8990 and mail them separately. (You can print Form 8453 from TurboTax for Desktop using Forms Mode (F6 or Forms>Open Form...).

Additional Information:

• IRS: Investment Interest Expense
• What Are Deductible Investment Interest Expenses?
• How does the standard deduction differ from itemizing deductions?

[JBV314]

I have 5 investments that issue a K-1 and one of them has excess business interest being reported.  I have from 8990 and I have looked at the IRS’s instructions on this form but found it totally useless explaining how to do the calculations.  I simply have investments that spin out capital gains, dividends, margin interest, wages from a part time job and some social security and these damned K-1s.

Do you or anyone else have a link to any examples how to do form 8990 or clearer explanation what is needed to come up with the numbers on 8990?  

[RobertB4444]

TurboTax will do this calculation for you if you enter the numbers and codes from your K-1 into the system.  If you use the desktop version of the program you will be able to switch to "forms view" after you enter your K-1 and see the calculations being used on the 8990 if you need to file it.

@JBV314 

[JBV314]

Which version of TurboTax do I need? This is also for the 2023 tax year if that makes a difference.

[PatriciaV]

Any version of TurboTax Desktop contains Form 8990. However, TurboTax Premier and TurboTax Home & Business provide expanded interviews and specific On Demand Guidance in the program that you may find helpful.

@JBV314 

[ellenj54]

I am running Turbotax Premier for this year's taxes, and it's telling me that I need to file Form8990 but that Turbotax doesn't support Form 8990 (I'll need to print it and submit it separately).  What I am doing wrong that this form isn't being generated for me?  Thanks

[PatriciaV]

Form 8990 is no longer supported by TurboTax for Form 1040 tax returns.  If you want to track your excess business interest, you will need to manually prepare that form and include it with the return that you print and mail. (You can also mail it separately from an e-filed return if you include Form 8453, which you can print from TurboTax Premier.)

Click here for IRS form and instructions for Form 8990.

@ellenj54 

[wjschermer]

Patricia, do you mean that I can choose not to fill out form 8990 if I don't wish to track excess business interest expense? I have no idea how to fill out this form and would simply omit it if I can (same issue Excess Business Expense reported on line 13K of my ET schedule K-1).

[PatriciaV]

Yes, deductions are always optional. Simply omit the entry and skip completing the related form.

@wjschermer