That can get messy when you are breaking out the interest from your own state's bonds.
1) When you are simply indicating all of the box 8 $$ are from non-generic "Multiple states"....then you can use the 1099-INT directly with just the box 13 value entered, and no additional adjustments anywhere (except in the year you buy a bond that has accrued interest in the purchase ).
2) If you are doing the state break-out of interest from your own state's bonds from all the others AND you have bond premiums in box 13 to deal with......then you need divide up the box 8&13 amounts, and create a separate 1099-INT (from the same issuer) with only the box 8 and box 13 values from your own state's bonds, and the remaining box 8 and 13 amounts form "Multiple states" on the original 1099-INT (or you can do the reverse...put the multiple states 8 & 13 amount on the new 1099-INT, and leave your own state's box 8&13 amounts on the original 1099-INT).
3) In a year for which you buy a tax-exempt bond with Accrued interest on it, and the 1099-INT you get also has any $$ in boxes 1and/or3 in it.....you actually have to remove all of the box 8&13 $$ from that 1099-INT, and create two new 1099-INT forms......one new one with just your own state's box8&13 $$, and another with just the Multiple State box 8&13 values. Then the accrued interest is reported for whichever bonds it belongs to.
Yes...it gets messy, but so far, there is no easier way to deal with it...except using #1 above (but even with that, if you have accrued interest to report for that particular year, that will require separate 1099-INT).
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
