Hi, surfer, I hope your day is going well.
Assuming you are a NY resident, Turbo Tax will report all taxable income to your NY resident return.
In Turbo Tax software, once you have entered the 1099INT with tax exempt interest in box 8. Turbo tax will next ask "which state(s) is the interest exempt from?" You must only choose the states that you have muni bonds from and add the dollar amount for each state.
As long as you do not add NY to this list of states exempt from interest, the muni bond interest will be added back to your income on the NY return. You should see this income on NY IT201, Line 20.
