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How to allocate amounts on a multi-state individual return (Form 1040)

SOLVEDby IntuitLacerte Tax38Updated August 25, 2021

Down below we will provide you with steps that may help you allocate income and expenses on a multi-state individual return.

The Ctrl+E method is supported in most input screens, and you can use it to allocate individual line items. If you don't want to allocate each item, but know the percentage of an activity that applies to each state, you can use the Percentage of source income method instead.

  1. Click inside the input field that needs to be sourced to multiple states.
  2. Hold down CTRL and press E on your keyboard (Ctrl +E). This will open the Allocate Multi-State Amounts window. This box can also be opened by clicking on the square on the right side of the field.
  3. Type in a Description, if desired.
  4. Enter the Amount for the state.
  5. Select the appropriate state in the 'State' column.

If one of the states to be sourced does not have income tax, use US as the state indicator.  This will tell the program to report the amount on the federal return.

If a state is not available in the dropdown, make sure the state has been added to the return on Screen 1, Client Information.

To allocate income for multiple states for Schedule C, Schedule D, Schedule E, Schedule F, or Schedule K-1, the Percentage of Source Income (.xxxx or 1 = 100%)(PY/NR) [O] field can be used.

This entry replaces the use of the Allocate Multi-State Amounts (Ctrl+E) window.

  1. Go to the Income input screen:
    1. Screen 16, Business Income (Sch. C)
    2. Screen 17, Dispositions
    3. Screen 18, Rental & Royalty Inc. (Sch. E)
    4. Screen 19, Farm Income (Sch. F/4835)
    5. Screen 20, Passthrough K-1's
      1. Screen 20.1, Partnership Information
      2. Screen 20.2, S Corporation Information
      3. Screen 20.3, Estate and Trust Information
  2. Hold down Ctrl+E in Percentage of Source Income (.xxxx or 1= 100%)(PY/NR) [O]
  3. Enter the number as a decimal in the Amount column.
  4. Select the applicable state from the State column.
  5. Repeat steps 3 and 4 for each state.

The Percentage of source income field is not available for income such as Interest, Dividends, Pensions, Gambling winnings, or other Miscellaneous income. It is also not available for adjustments to income or deductions. Those must still be allocated to each state using the Allocate Multi-State Amounts option (Ctrl+E).

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