I was instructed by the fiduciary to enter the Trust income figures into both Schedule E and 1041/K-1. I tried backing out the Schedule E portion, but Turbotax still would not give me tax credit for California.
Nevertheless, I think I found the problem:
State Taxes > California > Credits and taxes > Edit > Personal, home and family credits > Other State Tax Credit > Revisit
State: NM > Edit
Other State Tax Credit > Other State: New Mexico > Continue
real estate income > Edit
Type of Income: real estate income
Income Taxed by California:
Income Taxed by New Mexico:
The first time through I had entered $0 for "Income Taxed by California" thinking that at this point, Turbotax had not yet factored in the NM income. Otherwise, why would it be asking me to provide that NM figure here? To fix, I entered the same income figure previously entered in Schedule E and 1041/K-1 for CA and NM. Turbotax then gave me the expected CA tax credit.
Why doesn't Turbotax pre-fill the boxes for income taxed by CA and NM with the income figure I had already entered into Schedule E and 1041/K-1? That would have saved me a lot of time and confusion.
