State tax filing

You only need the exempt percentage from your state. Exempt interest is tax-free on your federal return, but is taxable to state, except for the percentage relating to your state. In TurboTax divide your exempt interest into your state interest and multiple state interest.

Suppose you had $1,000 in exempt interest dividends. 10% is from Alabama and you live in AL. Enter 10% of $1,000 in AL and the rest as Multiple States. TurboTax will make an adjustment on your AL return.

If it sounds too complicated, you can skip the whole thing. You'll be paying more state tax than necessary. Or you can speak with a Tax Expert.

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