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.
Table of contents:
Follow these steps to allocate multi-state amounts using Ctrl+E
- Click inside the input field that needs to be sourced to multiple states.
- 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.
- Type in a Description, if desired.
- Enter the Amount for the state.
- 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.
Follow these steps to allocate activities by Percentage of Source Income:
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.
- Go to the Income input screen:
- Screen 16, Business Income (Sch. C)
- Screen 17, Dispositions
- Screen 18, Rental & Royalty Inc. (Sch. E)
- Screen 19, Farm Income (Sch. F/4835)
- Screen 20, Passthrough K-1's
- Screen 20.1, Partnership Information
- Screen 20.2, S Corporation Information
- Screen 20.3, Estate and Trust Information
- Hold down Ctrl+E in Percentage of Source Income (.xxxx or 1= 100%)(PY/NR) [O]
- Enter the number as a decimal in the Amount column.
- Select the applicable state from the State column.
- 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).
How do I allocate a percentage of rental income and deductions to part year resident or nonresident states?
To allocate a percentage of rental income and deductions:
- Go to Screen 18, Rental, Royalty Income (Sch. E).
- Scroll down to the Other Information section.
- Hold down Ctrl+E in, Percentage of source income (.xxxx or 1=100%) (PY/NR) [O] code 504.
- Enter a percent or a '1' in the Amount column and identify the state in the State column.
This field applies to state part-year and nonresident returns only. Enter, in .xxxx format, the percentage of income that represents source income taxable to the nonresident/part-year state (e.g., enter 10% as .10). Lacerte multiplies each item from this schedule by the percentage entered to determine the source income taxable to the state. If the entire amount of income is source income, leave this field blank.
How do I use the Assign Entries To menu at the top of the Lacerte program?
Use the Assign Entries To field at the top of the program screen to tell the program which state you wish to source the information to. It is always a good practice to select the appropriate state in the Assign Entries To field before entering information in a particular input screen.
When using the Assign Entries To drop-down menu on an input screen that already has multi-state sourced amounts, you will receive a prompt indicating that the sourcing is assigned to multiple states, and continuing with the action will change the sourcing to the one state indicated from the drop-down. Use the following steps to change the sourcing of items in a particular input screen from one state to another:
- Select the current state in the Assign Entries To field that the items are already sourced to.
- Select the state in the Assign Entries To field you wish to source to for all items in the input screen.
- Select Yes in the confirmation screen to change the state for the amounts in the current screen.
- The state abbreviation next to the applicable items in the input screen should change to the state desired.
- The Assign Entries To feature only applies the changes to the schedule and screen you are viewing.
- The Assign Entries To feature can be changed for only one asset at a time in the depreciation screen.
When trying to allocate income to Federal on a return with multiple states, but one of the states is a non-taxing state (as Florida, for example), the option in the allocation fields, or the "Assign Entries To:" field at the top of the screen does not give the option for "Federal" to be selected
Check the entries on Screen 1, Client Information, in the section Resident Status. The checkbox for "Multi-state Return?" needs to be checked:
- Check the box for Multi-state Return?
- Choose Cancel when the box pops up with the list of states to add
- Close the client and navigate to the Clients tab
- Open the desired client again
The option for Federal will now appear in the allocation options and the "Assign entries to" option.