How to allocate K1 Box 1 income to states due to moving

[RobertPila]

I am doing taxes for someone that moved from MA to CO during 2025. They have a K1 with income in box 1. In the step-by-step instructions how do I allocate the correct portion to MA? For CO, it was pretty easy, but for MA all the K1 Income is being allocated to MA instead of only a portion.

[CatinaT1]

To allocate the correct portion of the Schedule K-1, Box 1 income to Massachusetts for a part-year resident in TurboTax Online, you have to manually adjust the income apportionment directly within the Massachusetts state tax interview.

Follow these steps to correct the allocation:

1. Select State from the left-hand menu.
2. Select Edit or Continue next to the Massachusetts part-year resident return.
3. Proceed through the initial state residency questions until you reach the Income Allocation or Your Massachusetts Income screen.
4. Locate the Business and Passive Income or Partnerships and S Corporations section (this category dictates how the federal Schedule K-1 data is handled).
5. Select Start or Update next to this category.
6. TurboTax will display the total federal Box 1 income. On the allocation screen, enter only the exact dollar amount of the Schedule K-1 income that was earned or received during the specific months the taxpayer lived in Massachusetts, plus any income that was strictly derived from Massachusetts business sources after they moved to Colorado.
7. Select Continue to save the correct allocation.

This manual entry overrides the software's default assumption and ensures Massachusetts only taxes the apportioned amount.

[RobertPila]

Thanks @CatinaT1  for the reply.

I tried what you suggested with different values. Here are answers and results

• 1st Question: Should this activity be excluded from the Massachusetts return? 
  • I always answer No here since some of it should be included.
• 2nd Question: Do you have any Massachusetts differences to report? The relevant form here is MA Schedule E-2 and is basically only Federal info for the Box 1 income and it asks about Interest from MA and non-MA banks.
  • If I answer No all income is included on MA and I am not asked to allocate income.
  • If I answer Yes I am given a table for Mass Differences and Amounts. Not really sure what to enter here. Is it an amount for the MA income? Is it an amount for income after the move? Do I enter two amounts, one for MA and another for non-MA. I went through this a few times with each of the answers.  FYI, these  entries appear MA Differences Smart Worksheet on MA Schedule E.
• I click continue and answer questions about:
  • Did partnerships renovate a building in an Economic Opportunity Area during 2025? No
  • PTE Excise Credit claimed: 0
  • MA and non-MA bank interest: both 0
• Click Done to complete Partnership (K1) entry
• Now I am asked Differences between Federal and Massachusetts. I am shown Total as if a full year MA resident which is the sum of all entries I made in the table above. The only way it makes sense to me is to do the two entries. Then for the Massachusetts amount, I need to enter a negative value because positive values increase my MA income even more than the full K1 Box 1 income.  What is also concerning is the help that appears when clicking on the link in the instruction - Differences can arise from items such as bonus depreciation that was taken on assets on your Federal return, but not allowed on your Massachusetts as if you were a full year resident. This does appear to correctly represent allocating the amount based on moved date.

The other option I tried was to change the Massachusetts Main Form for Nonresident and Part-Year Resident. This caused the MA Schedule R/NR form to be generated and causes the Income Adjustments questionnaire to appear where I can specific Massachusetts Income While Resident for different types. Also, I entered 0 for all entries for Massachusetts Income While Nonresident. The problem with doing this is the error check ends up removing the MA Schedule R/NR because there isn't any nonresident income which causes all the K1 Box 1 income to be allocated to MA.

Can you give me suggestions on how to correct this?

[RobertPila]

I found this older community thread that seems to be the same problem - 

https://ttlc.intuit.com/community/state-taxes/discussion/ma-state-tax-due-calculation-in-tt-as-part-... 

[DianeW777]

The advice may be to add $1 to the Massachusetts (MA) return in an income section so that it does recognize an adjustment and more accurately reflect the correct tax with the Schedule R/NR.

Please update here if you need additional assistance.

@RobertPila 

[RobertPila]

@DianeW777  Adding the $1 appears to be the best work around.

Also, this problem seems to have been around since at least 2022. Can a support request be opened and have it fixed? According to the instructions for the MA Schedule R/NR form, submitting a part-year, non-MA resident return does not require non-MA sourced income to be report to MA.

If you received Massachusetts source income before or after you became a Massachusetts resident for part of the year and your gross income exceeded $8,000 for the year, you must file a Form 1-NR/PY as both a nonresident and part-year resident.

If there isn't any non-MA sourced income, the Info Worksheet should allow selection of Non-residence and Part-year residence return checkbox and the Schedule R/NR worksheet should NOT be deleted.

thanks...