I have a client who has a dancing school partnership oganized as an LLC and she works as an instructor along with her partners. She will be receiving a K-1 from this partnership. She was driving expenses to get to this dancing school. Can the expense we written off, is so where?
Also, this LLC is located in NYC and the taxpayer is a NJ resident, does a NY return need to be filed?
If the dancing school is her regular palace of employment, then her drive from her residence to work and back is nondeductible commuting. If she is working in NY, then she she must file a nonresident NY return and a resident NJ return.
Otherwise deductible expenses incurred by the partners without reimbursement by the partnership are not deductible unless the partnership agreement requires the partners to incurr those expenses without reimbursement. If the partnership agreement has that provision then each partner deducts such unreimbursed expenses on Schedule E.
As Alan noted, commuting between home and a primary work location is not deductible. Travelling between two job locations, however, is deductible.
The dancing school is NOT her regular place of business, she has a job in NJ for which she gets a W-2. The reason I asked the question, is that if the dancing school was not a partnership and I was filing a schedule C for her, I would be deducting the milage. Since she is a partner and will be getting a K-1 (her only compensation from being a dancing school teacher is her share of the partnership). I'm not sure if I can deduct the travel to and from the work and if so, where?
Yes, as to the NY State and NY City tax returns.
Commuting from your home to a second job on a day off from your regular job would also not be a deductible expense. Basically, if you work two jobs on separate days, you don't get a deduction. If you work the two jobs on the same day, as Bill said, you get to deduct the cost of traveling from Job 1 to Job 2.
Re your Schedule C comment: See my reply to Bill Brown. You would not be deducting her drive to the school if it was on her day off from her regular job. You would be deducting the cost if she incurred the expense on a day she also worked at her main job.
But if you go from home -> Job1 -> home -> Job2 -> home, then nothing is deductible. Only if you go from home -> Job1 -> Job2 -> home, then Job1 -> Job2 is deductible. Sounds right?
Client went from Job 1 to Job 2 (K-1 job), therefore I deducted the milage from Job 1 to Job 2. Since Job 2 is being reported as a K-1 General Partnership Income and shows nothing regarding the location of work in NY, I do not believe a NY return is required for this NJ resident. Comments?
I'm sure NY will disagree with you.
Seth
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Since Job 2 is being reported as a K-1I understand the school is located in NYC. The LLC must be registered to do business in NY and must file a NY state partnership return; it is also subject to the NYC unincorporated business tax. In addition, the nonresident member of the LLC has income from a NY source and must file a nonresident NY state income tax return. The NYC individual income tax does not apply to nonresidents, however.
Katie in San Diego
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