Generally, a partner may not deduct the expenses of the partnership on his or her individual income tax return, even if the expenses were incurred by the partner in furtherance of partnership business.
However, an exception applies when there is an agreement among partners, or a routine practice equal to an agreement, that requires a partner to use his or her own funds to pay a partnership expense.
You only can deduct unreimbursed expenses on Schedule E that are trade or business expenses under section 162. Don't report unreimbursed partnership expenses separately if the expenses are from a passive activity and you are required to file Form 8582. (IRS Publication 587)
Here's how to report unreimbursed partnership expenses in TurboTax.
- You get to it when entering the K-1 information.
- As you go through the screens entering your information, you will eventually come to a screen entitled ‘describe your partnership’.
- Check the box that asks if you are 'required to pay supplemental business expenses'.
- The next screen is 'Unreimbursed Partnership Expenses' and you check the 'Yes' box.
- You can then enter your unreimbursed partnership expenses.
To deduct home office expenses as an unreimbursed partnership expense, see IRS Publication 587, Business Use of Your Home, Deducting unreimbursed partnership expenses.
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