Troubleshooting unexpected results in multiple-state processing (1040)

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When processing multiple-state returns, unexpected results may occur. Below are some of the most common issues found when processing multiple-state returns.

Incorrect forms appear for the state being processed

If resident forms appear for the nonresident or part-year resident state being processed, or vice versa, choose File > Client Properties and click the state's tab. Verify that the return is marked as nonresident, part-year resident, or resident.

Amounts transferred to the nonresident or part-year resident return are incorrect

State fields that are not exclusively associated with an address serve various purposes. See State fields in UltraTax/1040 for more information.

Postal Code: Ensure that items are assigned the proper postal code.

State if different (SID) fields: States fall within certain categories based on their calculation needs. Full build-up states, AL, CA, HI, MA, and WI, normally require that differences, depreciation for example, be presented in a format similar to the federal return presentation. Partial build-up states, KY, NJ, and PA, require less detail or specialized calculations that differ from the federal return presentation. AGI states, AR, AZ, CO, CT, DC, DE, GA, IA, ID, IL, IN, KS, LA, MD, ME, MI, MN, MO, MS, MT, NC, ND, NE, NM, NY, OH, OK, OR, RI, SC, UT, VA, VT, and WV, require that the in-state portion of federal AGI be reported for part-year resident and nonresident returns. These part-year resident and nonresident amounts are transferred and calculated using the AGI Worksheet. States that are not affected by the State allocation spreadsheet are NH and TN, and the Trust paid state estimated tax field within the K1T allocation spreadsheet is used by all processed states.

AGI states: In addition to being able to enter multiple states on a single K1 or K1T unit, applicable SID fields are available for use for all part-year resident and nonresident AGI states. For part-year resident and nonresident AGI states, except New York, there is a limitation to the calculation that will result. Amounts entered in the SID fields in Screens K1, K1-2, K1-3, K1-4, K1T, and K1T-2 must be entered as limited or allowable. For example, if a (10,000) SID amount is entered in Screen K1 or within the State allocation spreadsheet for Ordinary income (loss) from trade or business, a 10,000 loss will be transferred, as entered, directly to the state regardless of basis, at-risk, or passive-loss limitations. The federal amount columns on the AGI Worksheet will not be affected by any spreadsheet data entry. Screens K1-5, K1-6, and K1-7 fields are not intended for use by AGI states except for New York and Oregon part-year resident and nonresident returns. Screens 6198 and 6198-2 SID fields are not intended for use by AGI states except for New York and Oregon part-year resident and nonresident returns. Amounts entered in the SID column for New York and Oregon part-year resident and nonresidents are used as-is in an entire federal recalculation. All non-New York and Oregon amounts are disregarded during this calculation. Calculation results appear in New York Screen NYPAL and on the New York Post Allocation AGI Worksheet.

Connecticut Note: Connecticut-sourced passive activity losses and basis amounts should be entered in the State allocation spreadsheet.

Kentucky Note: Kentucky-sourced passive activity losses, basis, and at-risk amounts should be entered in the State allocation spreadsheet.

Montana Note: Montana-sourced passive activity losses should be entered in the State allocation spreadsheet.

Amounts transferred to the state returns being processed are correct, but are not being treated correctly on the state return

For example, retirement income entered in federal Screen 1099R often needs special coding to be treated properly on the state return. Screen 1099R offers a State use field in which you can enter additional information pertinent to state processing. If federal retirement is not taxable to the state being processed, enter an applicable state use code in the field. (A list of codes is available in the fieldview for the State use field if a postal code is entered in the State field.) Note that the taxpayer or spouse date of birth may be required for proper calculation. Enter date of birth information in federal Screen 1040.

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