State tax filing

You are supposed to handle that during the interview... in the actual 1099-DIV, and/or 1099-INT form that has the tax-exempt $$ reported on it.   

An "XX" on the worksheet would allow you to move on....but if a significant amount of the $$ came from your own state's bonds, you should be breaking your own state's $$ during the interview as you edit the 1099-INT or-DIV that shows the tax exempt $$.  (BUT, MN, CA, and IL have severe restrictions on doing this with any tax exempt $$ on a 1099-DIV form).

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Example for box 12 $$ on a 1099-DIV for a NC resdient....similar procedure for box 8 $$% on a 1099-INT).

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