Handling Unreimbursed Partner Expenses

UPE

Handling Unreimbursed Partner Expenses

  1. As a partner in a partnership, you cannot deduct any of the partnership expenses on your individual tax return—the partnership should pay for and deduct its own business expenses.
  2.  But if your partnership agreement or business policy forces you as an individual partner to pay expenses out of pocket, with no reimbursement available, then you can deduct the business expenses in full on your individual tax return as UPE.  Because the UPE is a trade or business expense, it also reduces your self-employment tax.
  3. The partnership agreement should clearly define how it will treat a partner’s individual production. 

If you have questions on how to treat one of your partners, please call Susan at 630.523.5762. For more helpful tips on becoming a highly profitable business owner, check out Highpoint Advisory Services.

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