Partner income for LLC

[LandR2]

I am feeling lost in the Turbo Tax questionnaire system for Home and Business program. 

I have income from an LLC that is owned by me and a second partner.  As partners we receive guaranteed payments for consulting services and distributions from profits.  This income is reported to us on a K-1 which was already prepared and distributed.  In 2024 I received guaranteed payments substantial enough to pay taxes but no additional profit distributions (all earnings in the business were retained for the moment). 

Again, I'm not looking for help on the K-1, but rather for my personal taxes which I file jointly with my wife.

I am confused about whether I need to fill out the business section of my personal tax software (Home and Business-- been using this version for about 20 years now).  In the past I had a sole proprietorship that used Schedule C but that business was converted to the LLC in 2023 and I am no longer making income outside of the partnership.  It's possible in the future that I don't need to buy this specific software package and a simpler one would suffice.

My questions is:  Do I need to fill out the Business income sections of the questionnaire to report the K-1 income?  If so, then why does this section not ask any questions about K-1 income?  It feels like this is a wrong turn to continue this way.

OR

Do I ignore the entire section which concerns business income and treat the K-1 reported payments as personal income in a later section?  The only concern I have about doing it this latter way is that I would like to report some personal expenses that are not reimbursed by my LLC, such as car mileage, tools, etc.  Will this come up at a later part of the tax forms?

My apologies if I'm being obtuse-- I filed this all myself last year but my returns are about 75 pages long and I am not seeing how to correlate the questions with the forms I needed to submit last year, which is the Schedule E form and about 10 other related forms.  Again, I think I'm being confused by the questionnaire. 

Can you please give me some guidance so I don't have to go back and erase everything at the end?

Thank you for your help TT Tax Community.  You guys are the best.

Michael (LandR2)

[DavidD66 · Accepted solution]

You do not use the "business" section to report your K-1.  You report that in the personal income section.  

If you don't have a business that you are reporting income and expenses for on Schedule C, you can't take those deductions you mentioned as you have previously.  However, you may be able to deduct unreimbursed business expenses if you are required by a partnership agreement or routine practice equal to an agreement to personally pay the expenses on behalf of the business. No deduction can be claimed if the terms of a partnership agreement/LLC operating agreement provide for reimbursement but the owner fails to submit a claim.  You can do this by using our Turbo Tax desktop product while completing your personal return.

You must use TurboTax Desktop to take the unreimbursed partnership expenses deduction.

[LandR2]

Thank you DavidD66!!!

This explains it perfectly.  On the deductions now I see it under the shorthand of UPE (Unreimbursed Partner Expenses) where I can do this.  My little company doesn't reimburse *anything* at the moment, although maybe I can add in some of those bennies as it grows 😉.

David you just saved me an afternoon of fiddling around down the wrong path.  So helpful. This community is why I use TurboTax.  Good answers to complicated questions.

Michael