Turbo tax does not automatically populate income derived from Federal obligations to your state tax return. For instance, I have investments in the Vanguard Federal Money Market Fund. The Vanguard brokerage statement lists all distributions from this investment as non-qualified dividends. However, in 2024, approximately 60% of these distributions were derived from Federal obligations. In fact, many funds have distributions that involve income from Federal obligations. Vanguard, as well as most brokerage companies, publish supplemental reports showing the amount of total distributions derived from Federal obligations.
THIS IS A BIG PROBLEM THAT I SEE FOR TURBO TAX USERS. Unless Turbo Tax asks for this data on the state tax return review, many users are not going to input this number and will ultimately overpay their state income taxes.
In my case, I had to override the amount that was carried over from my Federal return, and then Turbo Tax flagged it as a possible error on the final review.
I strongly suggest that Turbo Tax re-installs this question about income from Federal obligations in its state tax return walk through.
