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Preparing state returns in ProSeries

by Intuit•3• Updated 1 year ago

This article will help you:

  • Create state tax returns
  • Complete multi-state information
  • Understand the flow of data to the state

Accessing the state return

ProSeries Professional:

  1. Click on the ST button in the toolbar.
  2. Select the appropriate state from the dropdown list.
  3. Each State Information Worksheet is slightly different. Find the section for residency status or main form and confirm that the correct one is selected for a nonresident return.

ProSeries Basic:

  1. Click the State tab from the left menu.
  2. Select the appropriate state by checking the box next to the state name.
  3. Each State Information Worksheet is slightly different. Find the section for residency status or main form and confirm that the correct one is selected for a nonresident return.

When you complete the tax return in the correct order, ProSeries will transfer information between the return.

Preparing multi-state individual returns

When completing multiple individual returns for the same client it's important to complete the allocation worksheets on the Federal return:

  1. Prepare the federal return.
  2. Make sure that all income, credits, and deductions have the correct state abbreviation when applicable.
  3. Open the Federal Information Worksheet.
  4. Scroll down to Part IX - Part-Year and Nonresident State Return Filing Information Only.
  5. Complete the grid with the residency information.
  6. Complete the part-year and nonresident state allocation worksheets.
  7. Open and complete any nonresident returns. To create a nonresident state return:
    1. Go to the Federal Information Worksheet.
    2. Scroll down to Part XI - Part-Year and Nonresident State Return Filing Information Only.
    3. Check the box labeled Nonresident State Filers.
    4. Enter the two-letter state code in the State box in the table below.
    5. Select the Residency Status as Nonresident.
  8. Open and complete any part-year resident returns.
  9. Complete the full-year resident return.

Return to the Federal Information Worksheet, Part XI and use the QuickZoom to the Nonresident State Allocation Worksheet to enter the amounts that should be sourced to the nonresident state. Making entries here doesn't complete all information for the state return. Additional entries in the state return may still be required.

Preparing multi-state business returns

For business returns, most states follow the three-factor formula. Because every state handles the calculations differently and because the program doesn't know the source of the income, manual entries will likely be necessary on state returns. The apportionment or allocation of the income could be on a form, schedule, or worksheet depending on the state.

State taxation methods can be broken into four categories. Each of the following categories uses a different process to assess the amount of tax for an individual state return.

  1. The AGI from the federal return is modified by any additions or subtractions allowed at the state level to arrive at the state adjusted gross income. These states typically have an additions/subtractions worksheet.
    • Arizona, California, Connecticut, Delaware, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, Montana, Nebraska, New Mexico, New York, North Carolina, Ohio, Oklahoma, Rhode Island, Utah, Virginia, West Virginia, Wisconsin, District of Columbia
  2. For taxable income states, the state return starts with Federal Taxable Income and then makes additions and/or subtractions based on state tax rules and regulations. It is very similar to the federal AGI states, but it just starts off with the federal taxable income, rather than the AGI.
    • Colorado, Idaho, Minnesota, North Dakota, Oregon, South Carolina, Vermont
  3. With start from scratch states, all applicable information flows from the original entry on the Federal 1040.
    • Alabama, Arkansas, Mississippi, New Jersey, Pennsylvania
  4. Other income states. Some states only tax certain income items.
    • Florida - Taxes Tangible Personal Property
    • New Hampshire - Interest and Dividends Tax Return and Business Tax Return.
    • Tennessee - Franchise Tax
    • Texas - Franchise Tax
  5. States with no Individual income tax
    • Alaska, Nevada, South Dakota, Washington, Wyoming

When running Final Review on a state return, the proram generates the following error:

"Federal/State Depreciation Adj Summary: The federal tax return contains depreciation expense and/or Section 179 expense. In order to calculate a federal/state depreciation adjustment (if any), this state's postal abbreviation must be entered in the 'State Depreciation' section on the 'Depreciation Options Worksheet' in the federal program. See the tax help for more information."

Some of the most common states this error occurs in are PA, OH, IA, IL, CT, MN, RI, SC, WI, and MA.

How do I resolve this error?

There are two ways to resolve this error.

Recommended method:

  1. Open the Federal Information Worksheet.
  2. Scroll down to Part-Year and Nonresident State Return Filing Information Only.
  3. Make sure that all state returns being completed are entered here with the correct residency information.
  4. The error should now be resolved in the Final Review for the state.

Alternative method:

  1. Press F6 on your keyboard to bring up the Open Forms window.
  2. Type the letters DEO on your keyboard to highlight the Depreciation Options Worksheet.
  3. Click OK.
  4. Scroll down to the State Deprecation section.
  5. Enter State Postal ID in the empty State field.
  6. Mark both of the No checkboxes below the State field.
  7. The error should now be resolved in the Final Review for the state.
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