Get your taxes done using TurboTax

Back here in 2024. The same bug persists, but I found a "better" way to do the work around. (Not sure if this works in turbo tax 2023 or not.)

1. On the FEDERAL return, when entering information from my 1099-DIV, I filled in all of the appropriate values from boxes 1a through 13. 

2. When asked "Tell us if any of these uncommon situations apply to you", I check the box that says "A portion of these dividends is US Government Interest" and enter the amount of interest and dividends from US obligations which are taxable on the federal return but exempt from Colorado tax

3. Turbo Tax then prompts for what portion of the interest which is exempt from US taxes comes from which states. In my case, interest from Colorado is exempt, but interest from other states is not, so I have to break out how much of the US Tax Exempt Interest is also Tax Exempt in Colorado, and how much is not, by listing the income from Colorado on one line, and the total from all other states on the second line.

4. Finish Federal Return

5. In the Colorado State return, on the "Interest and Dividends from Mutual Funds" screen it should pick up the interest from US government obligations that you entered on the Federal return. There are three lines that allow you add additional income from US Government Obligations that is not subject to Colorado Tax.  Only enter additional values if you have NOT already entered them on the federal return. Note: only interest from US Treasuries, Savings Bonds, etc. is exempt. Interest from Mortgages (Fannie Mae and Ginnie Mae) is not. A full list is here: https://tax.colorado.gov/sites/tax/files/Income%2020.pdf

6. When you press "continue", TurboTax prompts you to "Enter interest and dividends from a mutual fund you received during 2024 that are taxable in Colorado but were not subject to federal income tax." DO NOT enter anything here UNLESS you have additional interest not reported on your Federal return. If you do have additional interest to report not included on your federal return, I'm not sure entering a value here will work properly or not. I don't have this situation, so your milage may vary.
In short, what worked for me is to enter everything on the Federal return and leave everything related to tax exempt interest blank on the Colorado return.
What SHOULD happen:

2024 Federal form 1040, line 2a, there should be a value representing tax-exempt interest, and a value from line 2b representing taxable interest.

2024 Colorado form 104, line 8, should show the amount from the federal form 1040 line 2a which is taxable in Colorado (basically state and local interest from states other than Colorado). It should be equal to or less than Federal 1040 line 2a, depending on how much of your federal tax exempt interest is from outside Colorado

2024 Colorado form 104 line 33, you will probably see the same value as the value from 104 line 8 above

2024 Colorado form104AD line 2, you should see the amount of interest which was included on Federal 1040 line 2b which is exempt from Colorado tax. Unless all of your taxable interest is from US government sources, the value on 104AD line 2 is likely much smaller than the value on federal 1040 line 2b.

Anyway, that worked for me. Check the actual forms before filing.