I believe that turbotax is incorrectly calculating the value for line 6 in New Mexico Personal Income Tax Adjustment form (NM PIT-ADJ). Turbotax doesn’t differentiate between federal and state exempt income even when you input the state numbers in the ‘Tell us more about your exempt-interest dividends’ section for the investment.
Based on Vanguard’s document ‘Tax-exempt interest dividends by state for Vanguard municipal bond funds and Vanguard Tax-Managed Balanced Fund’, only 1.32% of the income is from investments is exempt from NM taxes. In particular New Mexico (0.65%), Puerto Rico (0.52%) and Guam (0.15%). This results in only a small amount of the mutual fund dividend being exempt from New Mexico taxes.
I input the following in the ‘Wages
