Yes, UPE does reduce self-employment income and therefore SE Tax. For your expenses to deductible as UPE, however, you must be "required to pay these expenses under the partnership agreement". If they are, you may report the expenses on Schedule E (Partnership Income) as "Unreimbursed Partnership Expenses" (UPE). In this case, TurboTax will ask you about UPE with follow-up entry at the end of the Schedule K-1 input.
But if the partnership agreement specifically states that the partnership has a non-reimbursement policy when expenses are incurred outside of the partnership or that it does not specifically require partners to pay for certain expenses, the deduction may be disallowed at the partner level. If this is the case you would need to choose the latter option of payment and reimbursement. This method, however, would not reduce your self-employment tax on your self-employment income (Guaranteed Payments).
[Edited 02.24.2019 | 9:32 AM pst]
