Bond interest not taken off Illinois taxes

Forum|Forum|1 year ago
March 13, 2025
1 reply
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Same question that has been repeated every year with no fix I can see for 2024 - see below. I thought we were investing in Treasury Notes and didn't expect to receive a 1099B. TT moved the amounts from D to B but is not picking up the fact that this interest is not taxable in Illinois.

I see TurboTax has added US Treasuries Accrued Market Discount on Schedule B part 1 Interest for Federal tax. However, it is not showing on IL state Income tax return as subtraction. How do I get this added on my state tax to get as exempt from income?

Appreciate any help. I can fix manually but would be better using TT that I paid to use for my taxes.

Pat

SusanY1

While the interest itself on a treasury bond is exempt from state taxes (and this should reflect on your state return), the accrued market discount is not.

Only the interest that is a direct obligation of the treasury is exempt, which does not include the accrued market discount on bonds.

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pammby33Author

Thanks for the answer. Thankfully I imported the information directly from Morgan Stanley since I would have had no idea how to move the income from the Schedule D to the Schefule B - I'm not a tax preparer just a user. TT zeroed out the B and moved the taxable interest to the B.

Can you explain more about the market discount since I definitely count on this income being tax free to the State of Illinois and will talk to my investment advisor and change my investments if this is not tax free to the State of Illinois.