you're correct as to state municipal income. the program does not differentiate between state muni income that is taxable and that which is not. I have the same issue in Illinois. some Illinois muni income is taxable other is not. i have to go through the Illinois return Schedule M and indicate the amounts for each Illinois security whose interest is not Illinois taxable. Turbotax does not do this automatically. the Illinois return works by including in Illinois income all muni income reported on federal return and then having to manually complete Schedule M to subtract out the exempt items. most likley with Turbotax you'll have to do a similar manual adjustment for NY. someone more familiar with the NY return will have to advise to on the procedure.
