Appreciate the reply but I don't think this makes a lot of sense. Your last sentence indicates that the income ends up being taxable for the state. I'm trying to avoid this.
Here's the example: I have 10K in tax-emempt interest on my 1099-INT (Box 8). It's the only interest that appears on this 1099. But, I know $2K of the $10K is accrued interest. On Federal the $10K is not taxed - I'm good there. On my NJ state, all 10K is taxed. But, only $8K should be taxed. I am looking to understand how I can remove $2K of interest from my NJ return since this is accrued interest. RIght now, I'm going in and overriding the interest on my NJ INTEREST AND DIV INCOME Worksheet because I have not found where Turbo Tax can reduce accrued interest from my NJ interest.
