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Deducting qualified expenses for the business use of your home is possible when filing a Partnership return. The amount calculated per the worksheet in IRS Publication 587 (see information below) would be entered as unreimbursed partnership expenses on the Schedule K-1 (Form 1065) Partner’s Share of Income, Deductions, Credits, etc., and the adjustment on the Self-Employment Tax Worksheet using the following instructions:

Enter unreimbursed partnership expenses (not deductible as an itemized deduction on Schedule A (Form 1040) Itemized Deductions), directly on the Schedule K-1 form in the Additional Information section.

Note. There is a separate supporting worksheet to enter the business use of your home expenses.

The total amount of unreimbursed partnership expenses will flow to Schedule E (Form 1040) Supplemental Income and Loss, page 2. The name on Line 28 of Schedule E will be reflected as "UPE" (unreimbursed partnership expenses). This amount will also flow to the Schedule SE as an adjustment.

To enter the unreimbursed partnership expenses (including for the business use of your home) in your TaxAct® return:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Business Income in the Federal Quick Q&A Topics menu to expand, then click Partnership income (Form 1065 Schedule K-1).
  3. Click + Add Partnership Schedule K-1 to create a new copy of the form or click Edit to review a form already created.
  4. Continue with the interview process to enter all of the appropriate information.
  5. On the screen titled Partnership - Unreimbursed Partnership Expenses, enter the Unreimbursed partnership expenses to report on Schedule E amount (other than for the business use of your home), then click Continue.
  6. On the screen titled Partnership - Business Use of Your Home, click Yes to enter the expenses for the business use of your home.
  7. Continue with the interview process to enter all of the appropriate information.

You will want to be sure to address the question in the Q&A regarding material participation as expenses are only transferred to Schedule E, page 2 if you did materially participate. To indicate whether you materially participated in the partnership, follow these steps:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Business Income in the Federal Quick Q&A Topics menu to expand, then click Partnership income (Form 1065 Schedule K-1).
  3. Click + Add Partnership Schedule K-1 to create a new copy of the form or click Edit to review a form already created.
  4. Continue with the interview process to enter all of the appropriate information.
  5. On the screen titled Partnership - Schedule K-1 Information, check Box 1 - Ordinary business income (loss), then click Continue.
  6. On the screen titled Partnership - Ordinary Income, enter the 1 - Ordinary income or loss amount, then click Continue.

Additional Information

Per IRS Publication 587 Business Use of Your Home (Including Use by Daycare Providers), on page 20:

Partners

You may be allowed to deduct unreimbursed ordinary and necessary expenses you paid on behalf of the partnership (including qualified expenses for the business use of your home) if you were required to pay these expenses under the partnership agreement and they are trade or business expenses under section 162.

If you are using actual expenses to figure your deduction for the business use of your home, use the Worksheet To Figure the Deduction for Business Use of Your Home, later. If you are using the simplified method to figure your deduction for the business use of your home, use the Simplified Method Worksheet, later.

Deducting unreimbursed partnership expenses. See the following forms and related instructions for information about deducting unreimbursed partnership expenses.

  • Schedule E (Form 1040), Supplemental Income and Loss.
  • Schedule SE (Form 1040), Self-Employment Tax.
  • Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc.

More information. For more information about partners and partnerships, see Pub. 541, Partnerships.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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