Let me provide more details...
In my Fidelity account, I have both individual US Treasuries and a Federal Government Money Market Fund
Fidelity tells me 50% of the dividends from the MM fund represent U.S. government Securities
So here are the Fidelity 1099s:
1099-Div Line 1a "Ordinary Dividends" = $5,000: this is the interest income from the MM fund
1099-Int Line 3 "Interest on Treas. Obligations" = $3,000: this is from the individual U.S. bills & bonds
1099-B Line 1f "Accrued Market Discount" = $1,000: this is also from the individual U.S. bills & bonds
I review the Fidelity 1099-DIV and hit CONTINUE. This takes me to the screen "Do These Uncommon Situations Apply?" The first selection is "A portion of these dividends is US Government Interest."
So here I enter $3,500 = 50% of $5,000 + $1,000 (the AMD) which properly accounts for all of the interest from these positions coming from U.S. Treasury obligations
I do not alter any of the 1099s. My Federal Income Tax Due is the same whether I enter $2,500 or $3,500
But my state tax is lower when I use the correct $3,500
This seems to me the best workaround for the situation where TT does not include the AMD as US Govt interest, which should be excluded from state tax
