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New Member
posted Jan 30, 2024 1:40:49 PM

Where on form 1065 do I account for unreimbursed business expenses incurred by members of a multi-member LLC? Is it on 1065 at all, or only on members' own 1040 Shed Es?

My LLC requires members to pay business expenses which are not reimbursed. Would like to understand if these expenses are accounted for on the 1065 anywhere (each member's K-1?) along with the other expenses paid by the business itself. Or otherwise, are these ONLY accounted for on each member's personal taxes using for 1040 schedule E and left off the 1065 altogether?   

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4 Replies
Level 15
Jan 30, 2024 1:51:21 PM

K-1, Line 20

New Member
Jan 30, 2024 2:03:10 PM

Thanks! @tagteam, could you elaborate a bit regarding how I actually enter that into turbotax business? I do not see the option to add line 20 expenses specifically.

Level 15
Jan 30, 2024 2:05:30 PM

Have you tried Forms Mode? 

 

The entry would just be a figure and notation (such as UPE).

Level 15
Jan 30, 2024 3:32:50 PM

I want to add here, that if the business is going to reimburse members for their expenses and not have that counted as part of their taxable pass-through income, the business must have an accountable plan, where the member submits receipts or other proof that the expense is an ordinary and necessary expense of the business.  With an accountable plan, members can be reimbursed tax-free, and it comes out of the business as an expense before the remaining income is passed through to the members.  However, if the business does not have an accountable plan, then the business can't reimburse members tax-free.  The members must include the expenses on their own tax returns, and they can deduct them assuming they have their own reliable records.

 

For more about accountable plans, see publication 463.

https://www.irs.gov/publications/p463