For owners of pass-through entities (such as S-Corporations or LLCs), with K-1 income in multiple states where you are a non-resident, in TurboTax you can easily report state income taxes paid on your behalf by the company on composite returns. To do this, you must 1) complete your Federal return accurately, then 2) purchase at least one non-resident state return from TurboTax (about $50). Complete the state return for this state, reporting the K-1 income and income tax paid to this state. Then, 3) complete your resident state return. During this resident state return, you will be given the opportunity to report income and taxes paid to other states (including taxes paid via composite returns). Why is this important? Many states where you are a resident allow a deduction or credit for state income taxes paid to other states. You will want to report non-resident composite payments so you can receive this deduction/credit.
Note: Remember, if you don't need to file the state return you purchased in step 2 above (because a composite return was already filed/paid on your behalf by your company), you don't have to file this return (i.e., you don't have to double file). But, TurboTax requires you to complete at least one non-resident state return in order to unlock the opportunity to report composite payments to other states.
