I saw this post and am wondering how to solve the same problem since it is affecting my NJ tax return.
I have a 1099-INT with ALL tax-exempt interest. Some of that interest was accrued.
I live in NJ and all the interest IS taxable in NJ so I want to exclude the accrued interest from the total interest. It does NOT appear like I can do this. When entering the 1099-INT, I cannot adjust the tax-exempt interest. It only allow for the adjustment of taxable interest, which is useless to me on this 1099-INT since there is no taxable interest. But, I did try to see if adjusting the taxable interest would work, so I put in a positive value under REPORT INTEREST ADJUSTMENT, but it did nothing to affect my NJ return.
I thought a workaround would be to enter the accrued interest as part of the tax exempt interest for NJ, but this messes up the NJ tax form that calculates interest because Turbotax tries to allocate the 1099-INT Bond Premium on Tax Exempt Bond (line 13), which I really don't want.
Short of overriding the INTEREST AND DIVIDEND WORKSHEET for NJ to manually add the accrued interest to the ADJUSTMENTS column, is there another way to get Turbotax to subtract the accrued interest from my NJ taxable interest?
