Updated October 16, 2026. Quick answer: Box 4 of Schedule K-1 (Form 1065) reports guaranteed payments, which are payments from the partnership to a partner determined without regard to the partnership’s income. Box 4a is for services, box 4b is for capital, and box 4c is the total. The instructions send 4a and 4b to column (k) of Schedule E, line 28.
What box 4 reports
Part III of the form has three lines for this item: “Guaranteed payments for services”, “Guaranteed payments for capital” and “Total guaranteed payments”. The instructions define the term: “Guaranteed payments are payments made by a partnership to a partner that are determined without regard to the partnership’s income.” The remaining boxes are listed on the Schedule K-1 (Form 1065) boxes overview.
Part III of the K-1 is described in the instructions as “Partner’s Share of Current Year Income, Deductions, Credits, and Other Items”. Box 4 is one of the lines inside that Part.
Box 4a: payments for services
The instruction for box 4a reads: “Guaranteed payments are payments made by a partnership to a partner that are determined without regard to the partnership’s income. Generally, amounts on this line aren’t passive income, and you should report them in column (k) of Schedule E (Form 1040), line 28 (for example, guaranteed payments for personal services).”
The place to report is Schedule E (Form 1040). If there are several partnerships, “If you’re required to file Schedule E (Form 1040) and receive a Schedule K-1 from multiple partnerships, report items from each partnership’s Schedule K-1 on a separate line 28 of Schedule E.”
Box 4b: payments for capital and section 736(a)(2)
The instruction for box 4b reads: “These are guaranteed payments other than for services, such as for the use of capital or attributable to section 736(a)(2) payments for unrealized receivables or goodwill.” “Amounts on this line should be reported in column (k) of Schedule E (Form 1040), line 28 (for example, guaranteed payments for capital).”
Box 4c is a total: “Amounts on this line include total guaranteed payments paid to you by the partnership.” The three boxes are laid out together below.
| Box | Form label | Instruction as printed |
|---|---|---|
| 4a | Guaranteed payments for services | “Generally, amounts on this line aren’t passive income, and you should report them in column (k) of Schedule E (Form 1040), line 28” |
| 4b | Guaranteed payments for capital | “Amounts on this line should be reported in column (k) of Schedule E (Form 1040), line 28 (for example, guaranteed payments for capital).” |
| 4c | Total guaranteed payments | “Amounts on this line include total guaranteed payments paid to you by the partnership.” |
Guaranteed payments versus payments reported as fees
Box 4 should not be confused with box 19, where codes F and G report distributions of cash, marketable securities or other property for performing services. Guaranteed payments for services are the exception. “The partnership didn’t use code F or G to report guaranteed payments it made to you for services under section 707(c). Instead, the partnership reported the guaranteed payments in box 4a of Schedule K-1.”
The other side of the line is a payment made to a person acting in a non-partner capacity: “you and the partnership should report the results of the transaction in accordance with section 707(a)(1).”
The basis worksheet also mentions them: “Don’t include the FMV of services performed in exchange for guaranteed payments.”
Limits that apply to a K-1 that includes box 4
A K-1 with a box 4 amount often has other boxes too, and the instructions state the order of the loss limits: “These limitations and the order in which you must apply them are as follows: the basis limitations, the at-risk limitations, the passive activity limitations, and the excess business loss limitations.”
| Limit | As printed in the instructions |
|---|---|
| Basis | “Generally, a partner may only claim their share of a partnership loss (including a capital loss) to the extent it doesn’t exceed their adjusted basis in the partnership at the end of the partnership’s tax year.” |
| At-risk | “The at-risk rules generally limit the amount of loss and other deductions that you can claim to the amount you could actually lose in the activity.” |
| Passive activity | “If you’re an individual, an estate, or a trust, and you have a passive activity loss or credit, use Form 8582, Passive Activity Loss Limitations, to figure your allowable passive losses” |
| Excess business loss | “Your distributive share of losses attributable to all of the partnership’s trades or businesses may be limited under section 461(l).” |
For a partner who is an individual, “If you’re an individual and the passive activity rules don’t apply to the amounts shown on your Schedule K-1, take the amounts shown and enter them on the appropriate lines of your tax return.” “If you aren’t an individual, report the amounts in each box as instructed on your tax return.”
Basis is the partner’s own job to track. “Any losses and deductions not allowed can be carried forward.” “It’s the partner’s responsibility to track and maintain the information necessary to figure their adjusted basis in the partnership (also known as outside basis).” The partnership’s capital account on the K-1 is not a substitute: “Although the partnership provides an analysis of the partner’s capital account in item L of Schedule K-1, that information is based on the partnership’s books and records and can’t be used to figure the partner’s adjusted basis.”
Timing follows the partnership’s year, not yours. “If you file your tax return on a calendar-year basis, but your partnership files a return for a fiscal year, report the amounts on your tax return for the year in which the partnership’s fiscal year ends.” “For example, if the partnership’s tax year ends in February 2026, report the amounts on your 2026 tax return.”
Where box 4 sits among the other boxes
Box 1, rental boxes 2 and 3 and portfolio boxes 5 to 9b each have their own routing. The passive label is the key difference: “Generally, amounts on this line aren’t passive income”, so the Form 8582 path used for boxes 2 and 3 is not the instruction given for box 4a. See the box 1 page and the box 3 page for those routes.
Elections made by the partner personally are kept outside the K-1, including “Section 469(c)(7)(A) (aggregation election by real estate professional).”
Which revision applies
The edition read for this page is the 2025 Partner’s Instructions for Schedule K-1 (Form 1065) and the 2025 Schedule K-1 (Form 1065) itself, which are the revisions irs.gov served when they were read on 2026-10-16. Check the revision printed on the Schedule K-1 you received and the matching instructions, because a later edition can change the box layout, the column letters and the reporting lines.
Common mistakes
- Treating guaranteed payments as a share of profit. The instructions define them as payments made by a partnership to a partner that are determined without regard to the partnership’s income.
- Sending box 4a to the passive column. The instructions say amounts on that line generally aren’t passive income and are reported in column (k) of Schedule E, line 28.
- Reporting a box 4a amount again as a fee or a code F or G distribution. The instructions say the partnership reported guaranteed payments for services under section 707(c) in box 4a and not with code F or G.
Related: Schedule E (Form 1040), Schedule K-1 (Form 1065) boxes explained, Schedule C (Form 1040), and farm LLC or partnership basics.
Sources
- 2025 Partner’s Instructions for Schedule K-1 (Form 1065): https://www.irs.gov/pub/irs-pdf/i1065sk1.pdf
- Schedule K-1 (Form 1065) (2025), Partner’s Share of Income, Deductions, Credits, etc.: https://www.irs.gov/pub/irs-pdf/f1065sk1.pdf
Read from the IRS documents linked above on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.