itonewbie
Level 15

This is easy to explain and that's the reason why I asked about your client's residency.

Since your client is a tax resident in a state and is presumably subject to state tax on worldwide income, state income tax deduction is ratably allocable to gross income from all sources.  Lacerte wouldn't know that but you should see that it does trigger an informational diagnostic to prompt you to consider the sourcing position (if you had checked).

The way to solve this is to take the following steps:

  1. Go to Screen 35.1;
  2. Under Sections in the bottom left panel, click on Deductions and Losses;
  3. On the line for Other deductions not directly allocable [A], hit Ctrl+E to pull up the dialog box; and
  4. Enter NJ Income Tax Deduction (or something to that effect) under Description, enter 7,308 under Amount, and select NJ under State.

This $7,308 will show up on Line 3b and increase Line 3c to $10,000.

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Still an AllStar

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