The entry on 16 B for Other tax-exempt income seems like a logical place to put this, but then the balance sheet is out of whack because the retained earnings is wrong. Here's what the details say:
Other Tax-Exempt Income Smart Worksheet
-- above Line 16b
Enter other tax-exempt income on the Schedule M-1 Items Worksheet. The program enters a description and the amount entered on the Schedule M-1 Items Worksheet on this expanding table.
The problem I've found is that the software is supposed to enter the amount from 16 b on the M-1 worksheet, and it doesn't , so the retained earnings gets out of whack, and the software keeps circling back to the M-1 worksheet for an error.
***UPDATE*** You have to enter the EIDL grant amount (non-taxable) as follows - FIRST in the M-1 form, under "Other permanent income items". I put the note "EIDL Grant, non taxable", then the amount per the books. That will carry it over to item 16b, NOT the other way (16b --> M-1) . Then books match up.
However, this now causes an issue with CA state taxes, as they ask specifically about EIDL grants and incorporate the amount you put in PLUS add in the amount entered into M-1/16b. So, it is still messed up in Turbo Tax.
Intuit - if you are reading these, please fix this.
