Where to Enter Guaranteed Payments in Lacerte
Guaranteed payments go on the partnership Deductions screen, in the Guaranteed Payments section that also covers partner health insurance, with separate fields for payments for services and for capital. The Schedule K figure is on the Other Schedule K Items screen in the Guaranteed payments field. They are allocated by profit sharing percentage unless specially allocated.
- Detail
- Deductions screen
- Guaranteed Payments including partner health insurance
| Trial balance account | Lacerte screen and field | Lands on |
|---|---|---|
| Guaranteed payments for services | Deductions screen, Guaranteed Payments section | Page 1 line 10 and Schedule K line 4a |
| Guaranteed payments for capital | Deductions screen, second field | Schedule K line 4b |
| Partner health insurance | Same Guaranteed Payments section | Guaranteed payments, and the partner 1040 deduction |
| Schedule K guaranteed payments | Other Schedule K Items screen | Schedule K line 3b or 4 |
| Rental guaranteed payments | The Form 8825 entry | Form 8825 line 15 |
| Allocation other than by percentage | Special Allocations | Each K-1 line 4 |
| Partner draws | Not guaranteed payments. Equity | Schedule K line 19a and item L |
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| Acct # | Account | Debit | Credit |
|---|---|---|---|
| 1000 | Cash | 42,800.00 | |
| 1200 | Accounts receivable | 68,500.00 | |
| 1300 | Inventory | 55,000.00 | |
| 1500 | Equipment | 145,000.00 | |
| 1510 | Accumulated depreciation | 47,500.00 | |
| 2000 | Accounts payable | 28,400.00 | |
| 2100 | Accrued expenses | 9,200.00 | |
| 2400 | Notes payable | 92,000.00 | |
| 2450 | Due to shareholder | 15,000.00 | |
| 3000 | Common stock | 10,000.00 | |
| 3900 | Retained earnings | 86,300.00 | |
| 3950 | Shareholder distributions | 52,000.00 | |
| 4000 | Gross receipts | 612,000.00 | |
| 5000 | Cost of goods sold | 318,000.00 | |
| 6000 | Salaries and wages | 88,000.00 | |
| 6050 | Officer compensation (the account this page is about) | 72,000.00 | |
| 6300 | Depreciation expense | 21,500.00 | |
| 6900 | Other operating expenses | 37,600.00 | |
| Total | 900,400.00 | 900,400.00 |
Example journal entries
| Account | Debit | Credit |
|---|---|---|
| Guaranteed payments to partners | 90,000.00 | |
| Cash | 90,000.00 |
| Account | Debit | Credit |
|---|---|---|
| Partner A draws | 32,000.00 | |
| Cash | 32,000.00 |
The distinction that drives everything
A guaranteed payment compensates a partner for services or for the use of capital, without regard to partnership income. It is deductible by the partnership, reported on line 4 of the partner's K-1, and generally self employment income to the partner.
A draw is a withdrawal of the partner's own capital. It is not deductible, not reported on line 4, and affects only the capital account.
Client books rarely separate them. One account called partner payments, or draws, holds both, and the split has to be made from what the payments were actually for. That decision changes taxable income, so it belongs in front of the client rather than in the preparer's head.
Where the figures go
The deduction is entered on the partnership Deductions screen, in the Guaranteed Payments section, which has separate fields for payments for services and payments for capital. That section also covers partner health insurance treated as a guaranteed payment.
The Schedule K amount is entered on the Other Schedule K Items screen. If the payments relate to a rental activity, the Form 8825 entry puts them on line 15 of that form instead.
Screen numbers differ by module and Intuit's articles have used more than one for these, so work from the section names and confirm against your version.
Allocation follows percentages unless told otherwise
Lacerte allocates guaranteed payments to partners using the profit sharing percentages. Partner health insurance is allocated the same way.
That is wrong whenever the payment went to one partner, which is most of the time. A guaranteed payment to the managing partner allocated across all partners by percentage produces K-1s that misstate every partner's self employment income. The fix is a special allocation.
Health insurance for partners
Premiums paid for a partner are generally treated as guaranteed payments: deductible by the partnership, included in the partner's income, and then deducted by the partner on their own return as self employed health insurance.
Leaving them in insurance expense understates guaranteed payments, overstates ordinary deductions, and costs the partner the personal deduction. It is the partnership version of the S corporation shareholder health insurance problem.
Tax return treatment
| Form | Line |
|---|---|
| Form 1065 | Page 1 line 10, Schedule K line 4, and line 4 of each K-1 |
| Form 8825 | Line 15 for guaranteed payments attributable to rental activity |
Common questions
Where do I enter guaranteed payments in Lacerte?
On the partnership Deductions screen, in the Guaranteed Payments section, which has separate fields for payments for services and for capital and also covers partner health insurance. The Schedule K figure is entered on the Other Schedule K Items screen.
What is the difference between a guaranteed payment and a draw?
A guaranteed payment compensates a partner for services or capital, is deductible by the partnership, and is self employment income to the partner on line 4 of the K-1. A draw is a withdrawal of capital: not deductible, not on line 4, and it affects only the capital account.
How are guaranteed payments allocated between partners?
By profit sharing percentage, unless you specially allocate them. Since most guaranteed payments go to one partner, the default allocation is usually wrong and produces K-1s that misstate each partner self employment income.
How is partner health insurance treated?
Generally as a guaranteed payment: deductible by the partnership, included in the partner income, and deducted by the partner personally as self employed health insurance. Leaving the premiums in insurance expense understates guaranteed payments and costs the partner the deduction.
Related answers
Go deeper
This page is the short answer. These articles work through the same ground in detail.
Last reviewed October 18, 2026.