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February 1, 2024
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I have Treasury bill interest that is exempt from state taxes. Why is turbo tax showing it as taxable income on my state return?

  • February 1, 2024
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Best answer by renegadeak

On the 1099-INT screen, check the box "My form has more than just box 1" (or some such wording) to get box 3 to pop up.  Enter the interest in box 3. 


Talked with turbo tax yesterday. Took them quite a while to figure it out but they got me a answer. Virginia has an age related deduction based on federal agi. The deduction is reduced $1 for every $1 over a federal agi of $75000. So while they weren’t taxing the t- bill interest, my VA refund was reduced cause the interest raised my federal agi above $75000. Thanks all for trying to help.

1 reply

VolvoGirl
Employee
February 1, 2024

When you entered the 1099INT did you put the amount in box 3?  It should be a subtraction on your state return.  

February 1, 2024

I did put it in box 3. I then deleted the entry and my state refund increased by $200.

SteamTrain
Employee
February 1, 2024

which state?

 

Someone with that state software set will have to check it out and see if the Federal-State box 3 field interlinks are going to the wrong place in that state's software.

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*