U.S. Treasury interest must be entered in box 3 at the 1099-INT screen, in the federal section of the program. When it is entered there, TT will automatically make the deduction on the state return. There is no other way to make the adjustment.
Be sure that the US Treasury Interest in entered in box 3, at the 1099-INT screen. When you first see that screen, check the box "my 1099-Int has more than just a box 1", to get access to box 3.
If you have a 1099-DIV, from a mutual fund, and a portion of the dividends are from U.S. securities; after entering your 1099-DIV, you will reach a screen: "Tell us if any of these uncommon situations apply to you". Check the box "A portion of these dividends is U.S. Government interest".
