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Excluding K-1 trust income from state return.. The Trust previously paid the tax to the state trust was formed in.

bgoldsmith
Level 2

How do you exclude income from a K-1 on a NYS tax return, which was already taxed and paid by the state the trust was formed in.

The trust was formed in Massachusetts but the client lives in New York. As mentioned above, the Trust paid the MA state tax, thus should be excluded from NYS. I believe this is correct and if so, how to exclude from income.

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5 Replies 5
Accountant-Man
Level 11

The trust paid MA income tax on the income passed through to the beneficiary?

** I'm still a champion... of the world! Even without The Lounge.
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bgoldsmith
Level 2

Yes, that is what the client told me. Where are the input fields on the NYS return to exclude the income?

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sjrcpa
Level 15

IF that is true, it would be shown on the K-1s somewhere. It doesn't sound right-unless the trust has business income. Then there might be a nonresident withholding requirement.


ex-AllStar
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sjrcpa
Level 15

OR maybe there were capital gains, which are corpus, and the trust paid Mass tax on those. Meanwhile your client's K-1 has income (not corpus) that is taxable in their state of residence.


ex-AllStar
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bgoldsmith
Level 2

I agree sounds weird. However, that is what the client said the accountant who prepared the trust and K-1. Other accountant explicitly said that Massachusetts paid the state tax and should be excluded from the NYS income. It is in box 5 (other portfolio and nonbusiness income). 

Still unsure.... 😕

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