I got a 1099INT from my broker with both Box 1 and Box 3 interest. There was accrued interest paid on my purchase of treasury bonds that earned the Box 3 interest. How do I attribute all the accrued interest with the Box 3 interest so that my deduction for US Treasury obligations comes through correctly to my state return?
I will give an example with round fictional numbers for illustration to illustrate the issue:
Box 1 Interest $3000 (75% of my interest earned) - This was on certificates of deposit
Box 3 Interest $1000 (25% of my interest earned) - This was on Treasury bonds
Accrued interest paid for purchase of US Treasuries: $400
My Federal Schedule B shows:
Line 1:
Acme Broker $4000.00
Subtotal $4000.00
Accrued Interest -$400
Line 2: $3600.00
Turbotax is automatically attributing $100 (one fourth) of the accrued interest to Box 3 and $300 (three fourths) of it to Box 1 in some sort of prorated math. It then concludes for my state return I have $1000 - $100 = $900 of interest on U.S. Treasury obligations. Reality for my state deduction should be $1000 - $400 = $600.
How do I get Turbotax to not overstate my state deduction for US Treasury interest?
