When you go through the state returns (all state returns are different) you will be asked about allocations. Some states tax all of your income no matter what state the income comes from. It depends on the laws in your resident state. When you go thru the nonresident return, TurboTax will ask about each piece of income on your federal return. You will allocate all of the rental income to the nonresident state. If your resident state taxes you on the out of state rental income (some do), you can usually take a credit for the tax paid to the nonresident state. That is why you do the nonresident return first.
