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Partner guaranteed payments are reported on each partner's Schedule K-1. Partnerships may deduct payments or credits to a partner for services or for the use of capital if the payments or credits are determined without regard to partnership income and are allocable to a trade or business activity. Also include in guaranteed payments on the partners' Schedule K-1, amounts paid during the tax year for insurance that constitutes medical care for a partner, a partner's spouse, and partner's dependents, or a partner's children under age 27 who are not dependents.

Do not include any payments and credits that should be capitalized. For example, although payments or credits to a partner for services rendered in syndicating a partnership may be guaranteed payments, they are not deductible as guaranteed payments. They are capital expenditures. However, they should be separately reported on Schedule K, line 4, and on Schedule K-1, box 4.

Do not include distributive shares of partnership profits.

Report the guaranteed payments to the appropriate partners on Schedule K-1, box 4.

To enter partners' guaranteed payments within TaxAct® 1065:

  1. From within your TaxAct return (Online or Desktop), click on the K-1 Wizard tab. On smaller devices, click the menu icon in the upper left-hand corner, then select K-1 Wizard.
  2. From the Federal K-1 Wizard – Partner Summary, click Add to create a new copy of a Schedule K-1 or click Review to review a Schedule K-1 already created.
  3. The program will proceed with the interview questions for you to enter or review the appropriate information for each partner. You will be able to enter each partner's guaranteed payment on the K-1 screen Partner – Guaranteed Payments.

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