My Iowa state return adds back the municipal bond interest that was deducted on my Federal return. Why does Iowa add $2 to my value?

Forum|Forum|1 year ago
February 14, 2025
1 reply
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My MN return adds back the correct amount. I even zeroed out the value in the input and the $2 shows up on Iowa return. Would someone fix this bug please?

AmyC

Employee

Iowa exempts qualified bond interest. When you entered the bond interest in the federal section, you would have marked the nontaxable Iowa state amount. Return to the federal entry. Verify your entry for Iowa.

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turbokarstAuthor

I understand your comment but your response would drive a smaller addition to the state return, not more. In my case say I have $511 of muni-bond interest in a national/multi-state fund. In practice the Iowa amount is not consequential at 0.2% but let's say for argument it is 5% like FL. Then I would exempt 5% of the $511 or ~ $25 and 511-25 = $486 would be added back on my Iowa return (rather than the original $511).

I have checked the multiple states source without any additional selections. IN MY CASE, the Fed return is properly picking up the $511, the MN resident state return is picking up the $511 and the Iowa is for some reason adding another $2 and entering $513. I verified this by zeroing out the interest and $2 still appears in the Iowa addition.