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New Member
posted Jun 6, 2019 5:01:22 AM

Are guaranteed payments to a Partner shown in Box 4 of a Form 1065 K-1 subject to self-emplyment tax?

I believe Guaranteed payments are subject to SE tax, but Turbo tax (premier version) does not calculate SE tax if the guaranteed payments are in Box 4 of the K-1. However, if Box 14 in the K-1 is filled in, Turbo Tax does calculate SE Tax. For purposes of calculating the correct tax, is it ok to put the Box 4 amount in Box 14 instead? This will certainly calculate the SE tax due, but I want to be sure that this is an ok work-around.

0 5 4233
5 Replies
Expert Alumni
Jun 6, 2019 5:01:24 AM

The preparer of your K1 is (largely) responsible for calculating your Self-Employment income. This is done through entries in the K1 for Box 14.

Box 1 and 4 are taxable as regular income, but the SE tax can only be triggered by Box 14. If you performed services for these guaranteed payments, and your K1 has nothing or too little in Box 14, you should ask the preparer for a corrected K1.


 

Expert Alumni
Jun 6, 2019 5:01:25 AM

Just to clarify... while adding to Box 14 obviously makes you owe more money, the actual K1 needs to report that income too. Its not correct for you to manually add to Box 14, as this field produces compensation. Reporting compensation that isn't reported as compensation on your K1 can actually lead to problems with the IRS, especially if you receive tax benefits that require compensation. Box 1 and 4 aren't compensation by themselves

New Member
Jun 6, 2019 5:01:27 AM

Thanks Christina. That helps.

Expert Alumni
Jun 6, 2019 5:01:29 AM

You're welcome.

New Member
Jun 6, 2019 5:01:31 AM

so box 4 is showing up blank on my k1 but the A and C sections in box 14 have amounts that arent my exact guaranteed payments.. any ideas