US Treasury interest from Bonds, notes etc...are shown in box 3 of the 1099-INT, and that is handled automatically by the software.
US backed "Agency" bonds and notes (TVA, Fed Home Loan...etc) ?
Yeah, thsoe $$ show in box 1 and no easy way to deal with them directly.
Check your State software Q&A for an "Adjustment" area . A CA taxpayer found that he could enter his US "Agency" $$ in the CA Q&A menu to get those $$ subtracted from state income. But it may depend on the individual state software set you are using, as to whether a way is provided to subtract it. For my NC software, I can only get "Agency" $$ taken out by a direct entry using "Forms Mode" on the Desktop software.
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
