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 1065 return (Online or Desktop), click K-1 Wizard, then click Continue (on smaller devices, click in the top left corner of your screen, then click K-1 Wizard).
  2. If you have already created a Schedule K-1, you will need to 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 (desktop program: click Review instead of Edit).
  3. Click Step-by-Step Guidance and continue with the interview questions until you reach the screen titled Partner – Guaranteed Payments.
  4. Enter the applicable amounts in the fields below.