Schedule K-1 (Form 1065) - Guaranteed Payments

Partner guaranteed payments are reported on each partner's Schedule K-1 (Form 1065) Partner’s Share of Income, Deductions, Credits, etc. 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 K-1 Wizard, then click Continue. On smaller devices, click in the upper left-hand corner, then click K-1 Wizard.
  2. Click + Add Schedule K-1 to create a new copy of a Schedule K-1 or click Edit to review a Schedule K-1 already created.
  3. Click Quick Entry to scroll down to answer all applicable questions or click Step-by-Step Guidance to proceed with the program interview questions.
  4. On the screen titled Partner – Guaranteed Payments, enter each partner's guaranteed payment amounts, then click Continue.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.