Blog
Blog
If you’re part of a multimember LLC taxed as a partnership (or a traditional partnership), you might occasionally pay out-of-pocket for items like travel, meals, car expenses, continuing education, professional dues, or even home office costs.
If you’re part of a multimember LLC taxed as a partnership (or a traditional partnership), you might occasionally pay out-of-pocket for items like travel, meals, car expenses, continuing education, professional dues, or even home office costs.
You generally have two paths to take these items as deductions:
• Reimbursement: If your LLC or partnership reimburses you—provided the expense qualifies as a business cost, is well-documented, and submitted promptly—the reimbursement is tax-free for you and deductible for the business.
• Personal Deduction: If the expense isn’t reimbursed—and your business has a formal policy (either in writing or as an established practice) of not reimbursing certain costs—you may be eligible to deduct these expenses on IRS Schedule E. This deduction can lower both your income and self-employment tax.
While reimbursement is typically the preferred route, some partners may choose to handle expenses personally. Either way, understanding these options can help optimize your tax strategy and ensure compliance with business policies.
