Get your taxes done using TurboTax

Pennsylvania says:

1. P.S. 7301(k) defines Pennsylvania source income as "for a nonresident individual, estate or trust means the same as compensation, net profits, gains, dividends, interest or income enumerated and classified under section 303 of this article to the extent that it is earned, receive or acquired from sources within this Commonwealth:
2. By reason of ownership or disposition of any interest in real or tangible personal property in this Commonwealth; or
3. In connection with a trade, profession, occupation carried on in this Commonwealth or for the rendition of personal services performed in this Commonwealth; or
4. As a distributive share of the income of an unincorporated business, Pennsylvania S corporation, profession, enterprise, undertaking or other activity as the result of work done, services rendered or other business activities conducted in this Commonwealth, except as allocated to another state pursuant to regulations promulgated by the department under the article; or
5. From intangible personal property employed in a trade, profession, occupation or business carried on in this Commonwealth; or
6. As gambling and lottery winnings by reason of a wager placed in the Commonwealth, the conduct of a game of chance or other gambling activity located in this commonwealth or the redemption of a lottery prize from a lottery conducted in this Commonwealth, other than noncash prizes awarded by the Pennsylvania Lottery.

As you might expect, the most important phrase is in the first line "to the extent that it is earned, receive or acquired from sources within this Commonwealth". 

Unfortunately, since we in the Community cannot see your private tax data, I can't tell you why TurboTax is treating a portion of the trust income as taxable - please track down what income is being reported as taxable and come back as need be.