Home office deduction with 1065-K1

It depends on whether you were required to pay these expenses under the partnership agreement. 

Your home office expenses fall within "unreimbursed partnership expenses", which are discussed in the "Unreimbursed Partnership Expenses" section of IRS Instructions for Schedule E at this link.

As explained by Community user PatriciaV, there are basically three ways a partnership agreement can handle this issue:

1. specifically allow reimbursement for partner expenses outside the partnership,
2. specifically disallow reimbursement for partner expenses outside the partnership, or,
3. be silent as to reimbursement. 

Only number 1 "specifically allow reimbursement" permits the deduction according to the IRS instructions. 

If these expenses are allowed from you as a deduction, you enter them as a part of the Schedule K-1 entry.  TurboTax will ask you about unreimbursed partnership expenses during the interview, and follow up entry at the end of Schedule K-1 input.

Thank you for that explanation DavidS127.

>> TurboTax will ask you about unreimbursed partnership expenses during the interview, and follow up entry at the end of Schedule K-1 input.

TurboTax does not ask me about the un-reimbursed expenses after schedule K-1 inputs??!!

I am entering all the schedule K-1 information under the Personal Income Tab in TurboTax.

Other place I see for entering such expenses is under Personal Deduction & Credits tab ==> Employment Expenses ==> Job Related Expenses. But that does not co-relate that expense back to the unreimbursed partnership expenses. 

Still a little lost

ST2003

You should see a screen in TurboTax when you enter your partnership K-1 schedule that says "Describe this Partnership" and one of the options is "I am required to pay supplemental business expenses on behalf of this partnership/LLC for which I am not reimbursed."

Once your check that box, you should be allowed to enter your home office expenses as a single line item, under "Miscellaneous Supplemental Expenses."

Thank you for the information but I cannot find the option "I am required to pay supplemental business expenses on behalf of this partnership/LLC for which I am not reimbursed."  I am using Turbo Tax Home and Business 2019.  I am on the screen under Personal, Personal Income, Describe the Partnership.  That option is not on the list.  Am I missing something?

It is after you have entered dollar amounts. 

Ok I see it now thank you.  There are two screens that are titled "Describe the Partnership".  One towards the beginning and another towards the end.  The screen towards the end is the one I needed.

I search and cannot find this form 1065-K1  included and I upgraded to the Home and Business version. I have a partnership with K1 income not schedule C.

any help appreciated.

Please clarify if the Partnership sent you Schedule K-1 and exactly what entry you are trying to make.

@mrblack66 

Yes I have a K1 and filled in all the correct entries into TT.   I am in   partnership  but our business is run remotely from our homes and I have a dedicated office within my home strictly for business.   Thought from this thread that the  1065 K1 form is where you enter home office deduction for K1s but I cannot find this  in my version.  The only place I see for home office deduct  is with a Schedule C but that is not the case for me.

thank you

Yes, you will have to take your home office deduction on Schedule C.  Form K-1 is an informational form.  You use the information on the form to complete your tax return.  Your net earnings for self-employment are in Box 14 Code A on your Schedule K-1 Form 1065,

Thanks you and sorry for my ignorance but I  thought Schedule C was for Sole Proprietor or freelance  only  and  I am in a partnership. I tried it out by adding Schedule C  and filled out questions on car and home TT  didnt recognize the info I entered for income  on my K1 and gave no deduction since its showing no profit. I dont think you can do K1 and Schedule C from what I see. 

Are these partnership expenses that you pay but are not reimbursed?

If Schedule K-1 came from Form 1065, and you were required to pay these expenses under the partnership agreement, you may report your 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 (see below).

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 you qualify to report Unreimbursed Partnership Expenses, you will enter this during the interview for the related Schedule K-1.

1. Go to Income >> Schedule K-1 >> Start/Update
2. Choose Partnership/LLC and Add or Edit your K-1.
3. Follow the prompts to a page titled "Describe the Partnership."
4. Check the box for "I am required to pay supplemental business expenses on behalf of this partnership/LLC for which I am not reimbursed."
5. Answer "yes" to the question about "...your own pocket?".
6. Answer "yes" to the question about vehicle expenses (if applicable).
7. Continue to enter your vehicle information.
8. If you do not own the vehicle (ex: the Partnership holds the title), you will be able to report expenses but you won't be able to use the standard mileage method.
9. Continue to the end to see your total vehicle deduction.
10. You will be given the opportunity to report other expenses on subsequent pages.
11. Be sure to report any reimbursements you received from the partnership.
12. Continue back to the K-1 Summary page to save your entries.

If you have TurboTax for Desktop, you can use the Forms icon to view your entries on the Supplemental Business Expenses Worksheet (Suppl Exp - P) under the related K-1 Partner for this Partnership.

Appreciate your response. We do not have a non-reimbursement policy.  I have gone thru the steps  you have shown and entered vehicle info and that worked to show a deduction but this method does not give you the home office deduct like  you see in a  Schedule C.  Is there another version of turbo tax that does. I currently have Home & Business upgraded  from and really don't see  the difference. I see a Self Employed version will that get me to what I am looking for.

No.  For a partnership you will first have to calculate what your home office expense is on your own and then enter that amount as an 'Unreimbursed partner expense'.  The self-employed version of TurboTax has a whole interview for the home office deduction but not this partnership entry sheet.

So I need to upgrade again from HOME AND BUSINESS?  Why?  What is going on with Turbo Tax. They give free advice and software for most  people  then the small business owners get stuck paying for it.

I have the same situation, which I have solved over the  past few years by using another copy of turbo-tax and in it using the home office deduction calculator as if my k-1 income was from a Sched C business income and then putting that number in Sched E as a business expense not paid by the k-1 partnership. Too bad there's no home office deduction calculator for k-1 related expenses, but the system I propose here seems to work well.  Of course, it is important to note that I am not a tax accountant.

Ward

Great suggestion. I will give it try and see if it creates any issues.  I used to have some Schedule C income along with my business   no was never an issue until  this year where I dont have any.  Why I am confused by all of this .  appreciate your response.

I have a question but did not know where to post it after scanning 9 pages this comes closest. I JUST HAVE an LLC not a Partnership so maybe this is the wrong place. I own 2 homes outright. My personal home and one my girlfriend lives in. My home office is in her house (different location). While doing the Home Business it puts in my personal residence and not the actual place my office is at. How do I get the correct address into the spot where Home Office Address is and not my personal residence. Am I filing this wrong or placing the home office wrong. Thank you

If you have a Single Member LLC and are reporting your business on a Schedule C as a disregarded entity, you can claim home office expense on Schedule C.

Generally speaking, to qualify for the home office deduction, you must meet one of these criteria:

• Exclusive and regular use: You must use a portion of your house, apartment, condominium, mobile home, boat or similar structure for your business on a regular basis. This also includes structures on your property, such as an unattached studio, barn, greenhouse or garage. It doesn't include any part of a taxpayer's property used exclusively as a hotel, motel, inn, or similar business.
• Principal place of business: Your home office must be either the principal location of your business or a place where you regularly meet with customers or clients. Some exceptions to this rule include daycare and storage facilities.

Please see this TurboTax article and IRS Publication 587 for more information on the deduction for business use of a home.

See also this help article on reporting two locations for a home office.