I have a K-1 from IN, but reside in IL. How to report?

[Rick19744]

You will need to file an Indiana form IT-40PNR as a nonresident.  

However, you should first make sure that the partnership/LLC did not file a composite tax return on your behalf.  If they did, then you have no further Indiana filing requirement.

Additionally, the partnership/LLC may have remitted withholding on your behalf. This will be reflected on your Indiana K-1 line 8.  You can use this withholding when you prepare your Indiana tax return.

If you were not included in a composite tax filing, then you will need to complete the IT-40PNR.  You will include your Indiana K-1 information on this return.  Complete this return first.  Once completed, then you will know your Indiana tax and can take a credit for taxes paid to other states on your Illinois tax return.

[ledcpa]

Assume the individual has IN wages also and has to file an IN return.  Since a composite tax return was filed, they don't get credit for the withholding from the Scorp/partnership?  Is that correct?

[Rick19744]

Indiana mandates that nonresident's are included in a composite tax filing by the entity.
If that is all the Indiana sourced income, then no further Indiana filing requirement.
In your facts, the nonresident (I am assuming as your facts are brief and not clear) must file an T-40PNR and include all income; including the apportioned income from the composite filing.  The taxpayer's share of the composite tax will need to be reported on Schedule F line 1 along with any W-2 withholding.  You will also need to include a copy of the Indiana K-1 which should reflect the composite tax paid on the nonresident's behalf on line 8.

[ledcpa]

Thank you.  Yes, an IL resident with IL and IN wages and K-1's.  An additional question, for a 2017 K-1 that had the composite tax paid in 2018, is it a credit on the 2017 or 2018 IN 1040?  Also, is it an itemized deduction too, or no because the partnership/s-corp can deduct it on their return (1065/1120S)?

[Rick19744]

Responses to your questions:
1) If the composite tax is reflected on the 2017 Indiana K-1 line 8, then this is treated as 2017 withholding on the Indiana IT-40.
2) If the pass-through entity did not treat the composite tax as a distribution, then it is not an itemized deduction as the individual did not pay it, the entity did.

[ledcpa]

Great, thank you very much.

[Rick19744]

Welcome