This applies to state returns, in my case, NJ.
I have U.S. Treasury Note transactions. I bought them at a discount and then sold them.
The 1099B shows a capital gain as well as accrued market discount. The accrued market discount is correctly added to Federal Schedule B as interest.
However, in most states including NJ, interest from U.S. Treasury transactions is NOT taxable for state income taxes.
Turbotax incorrectly includes this accrued market discount in NJ taxable interest (line 16a) when it should be in NJ non-taxable interest (line 16b).
Thus Turbotax is incorrectly inflating NJ taxable income.
I use the desktop Premier version on Windows.
I have found no workaround.
