When I fill out a 1099-INT that shows interest received in box 1, I then say that I need to adjust that amount due to accrued interest paid. After I put in the accrued interest paid, I notice that my federal taxes decrease (which makes sense because it should lower the taxable interest earned). However, my New Jersey taxes do not change. Why is that the case?
From what I could tell by looking at the forms, when I enter the accrued interest paid, my federal 1040 line 2b goes down by that accrued amount paid, so that makes sense. But the NJ-1040 line 16a stays the same whether I enter accrued interest paid or not. It seems that the NJ portion does not recognize the adjustment to decrease the taxable interest?
Thanks for your help.
