How to report K-1 box 13 deductions from multiple partnerships on tax return

Wait, I thought code AE was for excess business interest expense? Doesn't that have to go on Form 8990 instead of just directly on Schedule E? And for code L, aren't some portfolio deductions still allowed if they're investment related? This is so confusing.

You're absolutely right about code AE - I misspoke. Code AE is indeed for excess business interest expense which is subject to limitation. It does need to be reported on Form 8990 "Limitation on Business Interest Expense." This form will help determine how much of that interest expense you can deduct this year. Any amount that can't be deducted this year will be carried forward to future tax years. Regarding code L, while some investment expenses are still deductible, most miscellaneous itemized deductions that were subject to the 2% of AGI floor were suspended by the TCJA through 2025. Investment expenses that would have gone on Schedule A line 16 are generally part of those suspended deductions. However, certain investment interest expenses reported elsewhere may still be deductible.

Did it explain why some items are deductible and others aren't? My accountant charges me by the hour to explain this stuff and I'm trying to understand it myself this year.

How do you know this site is safe? I'm always nervous about uploading tax documents to random websites. Did you have to create an account? How much did it cost?

It actually did provide explanations for each code and why certain deductions are allowed while others aren't. For example, with code AE (excess business interest), it explained how the business interest limitation works and walked me through the Form 8990 calculations. Much clearer than the IRS instructions. The site uses bank-level encryption and doesn't store your documents after analysis. You do need to create an account, but only with an email - no social security numbers or anything like that. They just analyze the documents and provide guidance, they don't file anything. I found it really helpful for understanding what I was looking at rather than just blindly entering numbers.

How does this even work? I thought it was impossible to get through to the IRS. Are you saying this service somehow gets you to the front of the phone queue?

This sounds like BS honestly. The IRS wait times are because they're understaffed. No way some random service can magically get you through unless they're doing something sketchy.

It uses a technology that monitors the IRS phone lines and calls repeatedly until it gets through. When it reaches a real person, it connects you to the call. It's basically doing the waiting for you. I was skeptical too, but it worked surprisingly well. No, it's not putting you "at the front of the line" - it's just automating the process of calling, navigating the menu options, and waiting on hold so you don't have to. I waited days trying to get through on my own with no success. With Claimyr, I got a call back within about 45 minutes when they connected with an agent.

Do other tax software programs handle K-1s well too? I'm using FreeTaxUSA this year to save money but worried it might not handle these complex forms correctly.

FreeTaxUSA does support K-1 entries, but in my experience, it doesn't provide as much guidance as TurboTax when dealing with the more complex codes. For something like box 13 code AE, which requires Form 8990, you might need to be more careful and double-check that it's flowing to the right places. If you're dealing with multiple partnerships and complex K-1 issues, it might be worth spending the extra money on more comprehensive software just to make sure everything is handled correctly. The premium tax software usually has better error checking for these situations.

Thanks, that makes sense about code AE. Do you know if partnerships ever send corrected K-1s? One of mine came super late and I'm worried they might send a corrected one after I file.

Yes, partnerships can definitely send corrected K-1s, and unfortunately they sometimes come pretty late in the filing season. If you receive a corrected K-1 after you've already filed, you'll need to file an amended return (Form 1040X) to correct any errors. The good news is that if the corrections result in you owing more tax, you generally won't face penalties as long as you file the amended return promptly after receiving the corrected K-1. If the corrections result in a refund, you can claim it through the amended return. To be safe, you might want to reach out to the partnership directly to ask if they expect to issue any corrections. Some partnerships will give you a heads up if they're still working through their numbers.

This is really helpful information, thank you! I'm new to dealing with K-1 forms and this explanation makes the process much clearer. One quick question - you mentioned that the partnership should provide a statement explaining what the code L expenses represent. Where should I look for this? Is it a separate document or part of the K-1 itself? I want to make sure I'm not missing anything that might qualify for those narrow exceptions you mentioned.

@a55fa451d546 Great question! The partnership should provide additional details either in a separate statement attached to your K-1 or in the "Additional Information" section that's often included with the K-1 package. Look for any supplemental schedules or attachments that came with your K-1. If the partnership didn't provide this detail (which unfortunately happens sometimes), I'd recommend calling their tax department or whoever handles K-1 inquiries. They should be able to tell you exactly what expenses make up that code L amount. For investment interest expenses specifically, these would typically be reported separately as code V in box 13 rather than code L, but partnerships don't always code things perfectly. Getting the breakdown will help you determine if any portion might still be deductible under the investment interest expense rules on Schedule A line 9. Also worth noting - if you're working with a tax professional, they'll usually request these details from the partnership if they're missing, since proper classification can make a real difference in what's deductible.

This is such a comprehensive and practical summary - thank you! I especially appreciate the tip about creating a spreadsheet to track everything. I'm dealing with my first year of multiple K-1s and was feeling overwhelmed trying to keep all the different codes and amounts straight. One question about your point #3 regarding keeping records of suspended deductions: Should I be documenting these on a specific form or just maintaining my own records? I want to make sure I'm prepared if the TCJA provisions do expire in 2026 and these deductions become available again. Also, for anyone else reading this thread, I wanted to mention that my partnership actually included a supplemental statement that broke down exactly what expenses made up each box 13 code. It was attached as a separate PDF with my K-1 documents. Definitely worth checking all the documents you received, not just the main K-1 form itself!

@a6557b2470b8 Great question about record-keeping for suspended deductions! There's no specific IRS form for tracking suspended miscellaneous itemized deductions from partnerships, so maintaining your own detailed records is the way to go. I'd recommend creating a simple tracking document that includes: - Tax year the deduction was suspended - Partnership name and EIN - K-1 box 13 code (usually L) - Amount suspended - Description of the underlying expense (from partnership statements) This documentation will be invaluable if TCJA provisions expire and these deductions become available again in 2026. You'll want to be able to demonstrate to the IRS (or your tax preparer) exactly what amounts were suspended in which years. Also, excellent point about checking all the partnership documents! Those supplemental statements are often the key to understanding whether any portion of code L amounts might qualify for current deductions under the narrow exceptions that still exist. I've seen too many people miss out on legitimate deductions simply because they didn't realize the partnership had provided the necessary detail in a separate attachment.