When preparing a multi-state K-1 tax return in Lacerte, the following critical diagnostic may generate to inform you about differences between state totals and allocations:
Tax year 2012–current:
There are differences between the state totals and the shareholders' allocations for certain items on the S-Corporation return. Please refer to the Schedule K / K-1 Reconciliation Worksheet for detailed information on the potential error(s). If these difference are the result of input error (not the result of apportionment) then adjust the amounts entered for state allocation overrides on Screen 33 or Screen 46 as necessary (ref. #25650)
How to resolve diagnostic Ref. 25650 in Lacerte:
Before you start:
- This is a critical diagnostic designed to alert you about potential issues with the numbers you reported on the tax return.
- You should review the Schedule K/K-1 Reconciliation Worksheet for the state affected by the diagnostic.
- For example, if the diagnostic reads, "There are differences between the Vermont totals and the shareholders' allocations for certain items on the S corporation return," you should review the Schedule K/K-1 Reconciliation Worksheet for the state of Vermont.
When reviewing the worksheet, if the amounts are accurate for reporting purposes, you can ignore the diagnostic.
If the amounts aren't correct for reporting purposes, check the following areas for inputs that may affect the worksheet:
- Go to Screen 33, Schedule K-1 Overrides.
- Diagnostic Ref. 25650 will generate if there are state and federal income differences.
- Make sure the total amounts in the State if different column for all taxpayers add up to the federal amount unless there are differences based on state law.
- Go to Screen 46, Schedule K-1.
- Make sure that these totals add up to the correct state amount.