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K-1 interest income being taxed twice in NJ

I have a couple of K-1's which reported some gains in Part III box 2 and also a little bit interest income in Part III box 5.  The interest income gets reported in Schedule B and also in NJ-Bus-2.  It gets taxed once for interest and gets taxed second time at 50% in NJ-Bus-2.  Is there a way to adjust this so it will only be taxed once?

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3 Replies
RobertB4444
Expert Alumni

K-1 interest income being taxed twice in NJ

No.  Your income is taxed at the federal level and then taxed again by New Jersey.  

 

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K-1 interest income being taxed twice in NJ

Thanks Robert.  I understand it will be taxed at both Federal and NJ level.  However, in NJ return, the K-1 interest incomes from Box 5 of K-1 Part III are already included in Line 16a Taxable Interest Income.   However, the K-1 interest incomes are included on Line 21 Distributive Share of Partnership Income (adding up Boxes 2 and 5 from K-1 Part III). This is automatically done by Turbotax, why is the interest incomes, however little they are, are added to both Line 16a and Line 21?  Is this correct?

K-1 interest income being taxed twice in NJ

there may be a bug in Turbotax. the instructions say 

Do not include on line 16a:
• Interest that was earned and paid to a sole proprietorship,
a partnership, or an S corporation. Report on Schedule
NJ-BUS-1.

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