@creswela
I have to agree with SteamTrain. Entering income in a different box than what is actually on the 1099-DIV is going to cause problems. The only "proper box12-Exempt Interest Dividends" is what's in box 12 on the 1099-DIV, if anything. It might look okay to you on your state tax return, but when the IRS compares the 1099-DIV to your federal tax return it won't match. If you enter the dividends in box 12 instead of box 1a you will probably get an IRS notice saying that you failed to report the dividends in box 1a, and telling you that you have to pay additional tax plus interest and penalties.
SteamTrain's screen shots are from Premier. You said you are using Deluxe. I don't know if the screens are the same in Deluxe, but there should be something similar.
@AmyC
