K-2 state code error…how do I fix it?

[DaveF1006]

It depends. K‑2 “state code error” almost always comes from one of three places, and the fix depends on which one applies. Below are the causes and the exact steps that typically resolve it.

If you do need K‑2/K‑3

• Open the K‑1 (Partnership or S‑Corp).
• Go to the State Information or State Source Income section.
• Make sure every line with a dollar amount has a valid state code (e.g., CA, NV, TX).
• If you have no state‑specific income, choose your resident state or “multiple states” if the software allows it.
• Re‑run the error check.

You DO NOT need K‑2/K‑3

This is the most common scenario. If you don’t have foreign income, foreign taxes, or foreign partners, you can simply turn off K‑2/K‑3.

1. Return to the K‑1 entry section.
2. Look for a question like:
3. “Does this entity have foreign activities?”
4. “Do you need to complete Schedules K‑2 and K‑3?”
5. Change the answer to no  for these.
6. The software will remove K‑2/K‑3 entirely.
7. Re‑run the error check.

You have state withholding but no state selected

If your K‑1 shows withholding, you must choose the state.

• Open the K‑1.
• Go to the State Withholding section.
• Select the correct state from the dropdown.
• Save and re‑run the error check.