I received taxable interest income paid from the IRS and want to exclude it from my NY state taxes since it should be exempt. How can I enter this in TurboTax?

First question, why do you think that interest paid to you by the IRS is exempt from New York taxation?

 

This New York State document says that "Interest on Federal Income Tax Refunds [is Subject to New York Agency and Obligations State Income Tax]".

 

Or is this some other kind of interest?

 

If you determine that the interest is actually not taxable in New York State, then you would do this to subtract it:

 

1. Open your return and go to the New York interview.

2. Proceed to the screen with the heading "Changes to Federal Income".

3. Scroll down to the subheading "Investment adjustments", and click on Start for "Exempt income from US government or exempt by NY law".

4. On the next screen enter on the first line the amount of interest to have subtracted from your New York income.

 

This will appear on line 31 of the IT-201.