This is my first year using turbotax, and I cannot get my municipal bond interest income to be calculated correctly on my PA return.
The gross interest and bond premium amortization flow though from my 1099-INT from Schwab fine. I manually entered some accrued interest, which is also being handled correctly.
I *also* entered the portion of the gross exempt interest that came from munis issued from my home state, PA. This is entered as a dollar amount in the federal return section, but is only relevant for the state return.
The amount entered should be netted against amortization and accrued interest, and then flow through to line 3 (Net Pennsylvania tax-exempt interest) of the Interest Income Worksheet. This in turn is used to populate line 6 (Interest income from direct obligations of the Commonwealth of Pennsylvania and/or its municipalities) of schedule A.
The problem: The amount flowing through to line 3 of the worksheet is the entire amount of net exempt interest, not the proportion that is actually from PA that I entered for my federal return. This effectively reduces my taxable exempt interest to zero, which alas it wrong.
I have changed the amount of PA muni income in the federal return to a very low number, and it still is staying at the full amount on the PA worksheet.
Anyone have any ideas before I spend 3 hrs on the phone with customer support trying to explain this?
