Hi Group,
After doing more Turbotax reading, I'm answering my own question to the group. Because I didn't read all the TurboTax infomation, I came to the wrong conclusion as my Subject line indicated. TurboTax is handling the NJ tax-exempt interest by allowing the user to tell TurboTax what's exempt or non-exempt.
My previous text on selecting the proper answer in the "Do any of these uncommon situations apply?" is the correct answer. In that same Pop-up... on the "My state" line there's a hyper-thread link to another TurboTax pop-up => "Learn more" On my screen it wasn't obvious it was a hyper-thread. When selected and then NJ selected, the text explains what the user needs to do for exempt or non-exempt. Essentially you are telling TurboTax how to handle the interest entries.
I'm sorry I jumped to an early conclusion, before doing my own research. This was my first post and probably my last.
Hopefully I clarified my original Post.
