There is a separate question to determine how your box 12 dividends are taxed by your state.
That is addressed on the screen, "Tell us more about your exempt-interest dividends." When you enter your Form 1099-Div into TurboTax pay close attention to all prompts and questions, especially as they pertain to your state,
You may want to try and delete the Form 1099-DIV and start again.
Likely, your state will tax all dividends, except the dividends from municipal bonds from your state. The provider of your Form 1099-DIV should be able to answer this. The source of your dividends is key.
Some dividends that are not taxable on your Federal Tax Return may be taxable on your Arizona State Return and TurboTax is adding them back for that purpose.
For example, a special deduction claimed on the federal return for dividends received under IRC Sec. 243 and IRC Sec. 245 must be added to federal taxable income in computing Arizona taxable income. In addition, for tax years beginning after 2018, Arizona law states that the amount of dividend income received from corporations and allowed as a deduction pursuant IRC Sec. 245A (participation dividends received) and IRC Sec 250(a)(1)(B) (global intangible low-taxed income) must be added back as well.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
