If the Schedule K-1 packet you received included additional information about states where the partnership operates and generates income, you may need to report that income by filing non-resident returns in those states. Generally, you’ll need to file a nonresident state return if you made money from sources in a state you don’t live in. Some examples are:
- Out-of-state rental income, gambling winnings, or profits from property sales
- S Corporation or partnership income
- Beneficiary income from a trust or estate
- If your employer withheld taxes for the wrong state
You should only have to enter the federal K-1 on your federal return and indicate in the personal section that you made money in other states (add Illinois and Wisconsin) to the ''Other State Income'' section. Detailed instructions for this step can be found here. TurboTax will transfer the K-1 information to each state return. Then when you go through the state returns, you will enter any adjustments/differences needed to report each state-specific K-1.
You should complete any nonresident returns (IL and WI) before you complete your resident Iowa return because IA will give you credit for any state taxes you may owe in the nonresident states. Print out or view your returns before filing to ensure you have not doubled up any K-1 income on your state returns.
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