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New Jersey law requires that pass-through entities supply a New Jersey Schedule K-1 showing the income calculated under New Jersey law, and is thus reported on the individual's New Jersey return. An example of a partnership New Jersey Schedule K-1 can be seen here.

If a partner has a New Jersey Schedule K-1 from a partnership and the 1065 return was prepared in the application, the New Jersey information will data share into the individual New Jersey return. See 1040-NJ: Data sharing Schedule K-1 information for more details. If the New Jersey Schedule K-1 was not prepared in the application, enter the data as follows:

• Part II, Box 4A - If the taxpayer is a resident of New Jersey, enter the Total Distributive Share of Partnership income (line 4, column A) on federal Screen K1-2 in the Ordinary business income (loss) - State, if different field. If the K-1 is coded to a state other than New Jersey (via the State postal code field) use the NJ column in the Allocation grid instead. If the taxpayer is a part-year or nonresident of New Jersey, enter this amount on federal Screen K1St in the Ordinary income everywhere field. If the K-1 is multi-state, multiple screens of K1St will exist. Verify that the ordinary income amount is entered on the NJ unit.  
• Part II, Box 4B - If the taxpayer is a resident of New Jersey, amounts in column B will be the same as column A and no additional data entry is required for column B amounts. For part-year and nonresidents, enter the New Jersey source amount on Screen K1-2 in the Ordinary business income (loss) - State, if different field. If the K-1 is coded to a state other than New Jersey (via the State postal code field) use the NJ column in the Allocation grid instead. 
• Part II, Box 5A - If there is an amount for Pension in Box 5A, the taxpayer should've received an Form 1099R as well. Enter this amount in the Gross distribution field on federal Screen 1099R in the Retirement folder. 
• Part II, Box 6A - When an amount is in this box, there is a gain or loss from a sale of partnership and the federal K1 unit should be marked as disposed of on federal Screen K1-2. Use federal Screen Sale or the Schedule for detail statement on federal Screen B&D to enter the gain and any other relevant sale information. 
• Part II, Box 6B - When the New Jersey source of gain or loss from sale of partnership is different than the federal, use the Statement for detail on federal Screen B&D to enter the sale. This statement will allow you to split the sale on multiple lines. Enter the portion that is NJ source on one line with State code NJ, and the Form and Unit field coded to the proper unit of the K1. On a new line within the statement, enter the rest of the sale without a State code (or different state) so that the federal return reports the full amount of the gain/loss.  
• Part III, Box 1 - Enter the nonresident partner's share of NJ tax on federal Screen K1-4 in the State income tax withheld - State, if different field. If the K-1 is coded to a state other than New Jersey (via the State postal code field) use the NJ column in the Allocation grid instead.
• Part III, Box 2 - Enter the partner's HEZ deduction on Screen NJAdj-2 in the Health enterprise zone deduction field. Note that this amount is the total amount and not a "per K-1" amount. 
• Part III, Box 3 - Enter the partner's sheltered workshop tax credit on Screen NJCr in the Credits folder. Note that this is also a total amount and not a "per K-1" amount. 

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