Enter Form 1099-INT in TurboTax in the Federal section exactly as it appears, and answer the follow-up questions. The allocation of the exclusion, if needed, is made on the state returns.
Interest income from Treasury bills, notes, and bonds is subject to federal income tax, but is exempt from all state and local income taxes. See this IRS webpage for more information.
There are follow-up screens in that section that allow you to make any necessary adjustments. When you see the screen, "Do any of these uncommon situations apply?", select either I need to adjust the interest reported on my form or My state (ME, MD, MA, NH, NJ, or WV) doesn't tax all of this interest as applicable. Read the additional information at the Learn More links that appear on that screen. Depending on your selections, TurboTax provides additional entry screens for you to enter the amount of the adjustment and the reason.
When you lived in more than one state during the tax year, you should prepare the earlier nonresident/part-year resident state return first and then the return for the state where you lived at the end of the year, to get correct results. If you prepared them in the wrong order, you can delete them and start again.
Different states treat the income allocation calculation differently. Complete the TurboTax interview for the earlier state, and make the correct interest income adjustment where prompted. When that return is complete, then complete the state interview for the later state.
See this TurboTax help article for more information about splitting income between states.
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