Since you made the correction after you started your state return, you need to transfer the corrected data back over to your state return by starting the state over. The program will then pick up on the correction that you made and properly treat this income as non-taxable on your state return.
Here are the steps to do that:
- Once logged into TurboTax click on State in the menu on the left-hand side and then select continue (Note: some users may see State Taxes in the center of the screen rather than on the left-hand side)
- Beside your state click delete then answer yes to confirm
- Now select Add Another State to begin again
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