Entering source interest or dividend income for a nonresident state tax return (1041)

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Use the following procedure to enter interest and dividend income that is considered source income for a nonresident state tax return.

  1. In the folders block, click the Income folder to open Screen Income.
  2. Click the statement button for the Interest income (including foreign source) field.

    Note: The same statement is available on Screens K1 and K1T for the Interest income including tax-exempt field.

  3. In the statement, enter a description in the Payer column and the amount in the Taxable Interest column.
  4. Enter a postal code in the Postal Code column. If the postal column is blank, the state will not recognize the amount as source.
  5. Enter an amount or percent in the InState Source ($ or %) column to indicate the portion of the Taxable Interest column that is source income for the state indicated in the Postal Code column. If this column is blank, no portion of the taxable interest will be considered source income.
  6. If the State Use column is available, select a code, if applicable. 

    Note: Many 1041 state returns only consider Code 10 - Business interest as source income.

Notes

  • Each line in the statement is a separate entry. A postal code, state use code, and source amount or percent is necessary for each line.
  • We recommend that you enter income for U.S. government obligations on a separate line from state source income.
  • Use the F/S column when preparing multiple-state tax returns. For multiple-state tax returns, make duplicate line entries of an item for each state, as necessary, with a different postal code and source percent for each entry. In the F/S field, enter for all but one of the duplicate line entries. The federal application disregards entries coded S. Enter in the F/S field if the item is applicable only to the federal return.

Related topic: 1041-US: State processing FAQs

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