Can I Put My Unreimbursed Partner Business Expenses on Schedule A?

True partners get a handshake -- and a K-1.

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Where your unreimbursed partner business expenses are reported depends on the type of partner you are. If you are a member of a partnership who is paid as a legal partner and receives a K-1, you would report your expenses on the Schedule E form instead of on Schedule A. If you are an employee who is called a partner, your unreimbursed partner expenses would be treated as unreimbursed employee expenses and you would report them along with your other itemized deductions on Schedule A.

Reporting on Schedule E

When you are a partner in a business, you will receive an informational return from the partnership called a K-1. The K-1 contains your share of the partnership's profits or losses and is reported on the Schedule E form. If you have unreimbursed expenses from a partnership in which you are an active participant, the Internal Revenue Service requires you to report them in their own line in column "h" of Line 28 of the Schedule E form -- separate from the entry corresponding to your K-1. The IRS also requires you to label them "UPE" for unreimbursed partnership expenses.

Reporting on Schedule C

Another possibility could be that you work as a contractor for a business but are still called a partner. You might even call yourself a partner in a business that you own by yourself. If you fall into this category and are a contractor, you should receive a 1099 from the business that reports what you are paid. If you're self-employed, you might get 1099s from clients. The IRS allows you to write off all of your business expenses against your income on the Schedule C.

Reporting on Schedule A

If you are an employee and receive a W-2 for your work instead of a 1099, the IRS might allow you to write off unreimbursed expenses from work as a part of the itemized deductions you report on Schedule A. They fall under the general class of miscellaneous deductions, and your ability to write them off is limited by how much you earn. You probably will also have to attach Form 2106 to detail what you spent.

Schedule A Drawbacks

While your accountant is the best source of advice on where and how to report your deductions and unreimbursed partner expenses, Schedule A is generally an inferior place to claim them. It allows you to only deduct unreimbursed expenses and other miscellaneous deductions that exceed 2 percent of your adjusted gross income. Also, if your income falls above a certain threshold -- $150,000 or more in the 2013 tax year -- the IRS might limit your deductions. Expenses on Schedule C and E, on the other hand, generally aren't limited as long as they fit the IRS' broad definition of being reasonable and they are being used to offset income you earned.

Photo Credits

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About the Author

Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." Lander holds a Bachelor of Arts in political science from Columbia University.

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