Federal bond interest is exempt from taxation in California and all states. Some states tax other types of interest differently than how it is taxed on your federal return and the box you are referring to applies to those states. I believe the 1099-INT form you received has the tax exempt interest listed in box 3, so that is how TurboTax will know not to include it with your California income.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
