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Sourcing Income for a Multi-State Passthrough K-1 in Lacerte

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Sourcing Income for a Multi-State Passthrough K-1 in Lacerte

This article will help you understand when, and how to use the different sourcing options available on the K-1 in Lacerte.

When entering a multi-state K-1 you always want to start with the Federal Amount.

Federal Amount column:

Use this column when amounts need to flow to the Federal return and the resident state return.

Sourcing the Federal Amount column.

Use CTRL+E to open the source box on the Federal Amount column. From here you can use code N and code S to show Lacerte how to source the amounts.

  • Use code N to tell Lacerte to report this amount on the Federal return. This will still flow to state returns that start the return on Federal Amounts. 
  • Use code S to tell Lacerte to report this amount directly on the state return, bypassing the Federal return.
  • To remove an N or S Code click in the N/S field and choose the blank option at the top of the list. 

Using the State, if Different column:

This column should only be used when there is a tax law difference between Federal and State(s).  This will create an adjustment on the state return, e.g. ordinary income is different between Federal and state due to different Section 179 limitations. This column is most commonly used for the Resident State when working with a multi-state return.

State Source Amount:

This column is used for entering state-specific amounts for nonresident states.

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