Turbotax is generating the following error message:
"Subs Schedule: line 2, column A - Exempt interest and dividends from Federal bonds, notes and obligations should not be greater than taxable interest. Interest on Form 2 column 2, line A is $."
I have determined the portion of bond fund dividend income reported on 1099-DIV that is derived from Federal bonds, notes and obligations, which I understand should be exempt from MT State taxation.
Montana Form 2 line 2, column A is for reporting taxable interest income - 1099-INT, (which is zero). Taxable ordinary dividend income (1099-DIV) is reported on Montana Form 2, column A, line 3b.
It seems like the warning is incorrect and that the Federal interest exempt from state tax needs to be less than the COMBINATION of 1099-DIV and 1099-INT income (MT form 2, column A, line 2b and MT form 2, column A, line 3b), but Turbotax doesn't recognize this. Is this an error in the program? Is there a work around?
I can't find anything on Turbotax topic browsing, but found the following on TaxSlayer that seems to confirm that Federal dividend income should be exempt from the combination of interest and dividend income reported at the state level.
(TaxSlayer) "Interest On U.S. Obligations (Line 2)
You can subtract interest received from U.S. Government Obligations and mutual funds attributable to that interest from your federal AGI as long as it is included in your federal AGI on Form 2. Amounts listed in the Federal Section under Interest or Dividends > Amount of Interest in US Savings Bonds subtracted from state return are automatically pulled to this line."
