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A second attempt at correctly inputting the data so as to somehow induce Turbo Tax to tax the Federal Exempt Interest in my non PA muni fund.  No matter how I twisted and turned I could not get it to work.  I am a volunteer for the AARP Taxaide program here in PA.  We use the Taxslayer software to do taxes for our clients.  I input the same data into Taxslayer where it is somewhat convoluted, but there are step by step instructions on how to solve the issues I have with the PA non taxable dividends.  What it does is first input all dividends (US Govt dividends and Exempt interest dividends included) in the Federal calculations as though all are taxable in PA. Then in the PA state section subtract the non PA taxable dividends from the total which I manually calculate.  Result is what I understand to be the right answer.  I will efile my taxes through the AARP program (perfectly legally) and cheaper since I don't need to pay the state efile charge through Turbo Tax.  Sad since I prefer the continuity that using Turbo Tax has given me over the years.

I could always pull in the previous year to turbo tax.  Now I can't even pull in the data I entered on the free version into the Paid DELUXE version!!  Why NOT???  I've been on hold with Turbo tax for hours to ask this question.  

@dzimmer10 , while this looks arbitrary i.e. allocation based  purely on  quantum of income  from diff sources rather than actual amount for each source,  it is a standard method applicable to all.  I don't think you can over-ride this.  Also note that the actual effect may or may not be  that severe ( at least in most cases), because it just shifts  the  load  and therefore may affect the allowable FTC ( even if small ), but  not the total Foreign Tax Credit available.   Is there more one of us can do for you ?

It depends.  If you made money in a state you are not a resident in, and the state does not have a reciprocal agreement with your resident state, that nonresident state will tax the work performed in the state. You will file a non-resident return for the work performed there, then you will take a credit for taxes paid to other states on your resident return.     If the state does have a reciprocal agreement with your resident state and you only have W-2 income, you should not prepare a return for that state, or check any boxes saying you made money in another state. Here is more information on reciprocal states: What is a state reciprocal agreement?   Here is a TurboTax article you may find helpful: How do I file a nonresident state return?

Thanks so much for your reply. Just want to make sure that I understood your answer correctly by using some numbers. Let's say, my federal credit was $5000 and my CA credit was $1000. I took the federal credit of $5000 and entered on Federal Schedule 3 Part II Line 13b. On CA 540, Part II, Line 16 (Column B), I enter $5000 (the federal credit I took); and on Form 540 Line 78 (Total Payments), I will write "IRC 1341 $1000" and manually (by overwriting??) deduct $1000 from my total payment amount? Also, you mentioned enter the federal deduction on Schedule CA (540) Part I, Section B, Lline 16 (Column B), I  assume you mean Part II Line 16 (Column B)? I am still quite confused! Please help!! Thanks so much!

It is possible that you are seeing the New York calculation.  New York nonresident tax is calculated by determining the tax rate on your total federal adjusted gross income (AGI) and applying it only to your New York-source income. You will see your total income and taxable income on the Form IT-203, which TurboTax will calculate for you.  If you do not see this, please feel free to post again. @Reneebberger    Here is an Example Calculation: Total Income: $100,000 (Federal AGI) NY Source Income: $30,000 (Earned in NY) Taxable Percentage: $30,000 / $100,000 = 30% Base Tax: NY calculates tax on $100,000, e.g., $10,000. Final Tax: $10,000 * 30% = $3,000 (plus applicable NYC/Yonkers taxes

Re-reading the series of posts I want to make some clarifications (and I will amend my previous answers as well).  The earnings portion of the corrective distribution will be reported on Form 5329 because it is coded on the Form 1099-R as an early distribution with code J.  The purpose of Form 5329 will be to record the exception reason that the earnings are not subject to the additional 10% tax.  Form 5329 must be included as part of the return in this situation even though no additional tax is being assessed.  If there were no earnings involved and only the original contribution was returned, then there would be no Form 5329.   The following are the instructions and options for handling the removal of the excess Roth contributions and earnings by the due date of your return.  When entering the Form 1099-R as indicated in the instructions below, use the information that you have available for the financial institution holding the Roth IRA account.   Follow these steps:   Since you made the excess contribution for 2025 and will withdraw the 2025 excess Roth IRA contribution plus earnings in 2026 before the due date, then you will get a 2026 Form 1099-R in 2027 which should have codes P and J.  This 1099-R will have to be included on your 2025 tax return and you have two options:     Amend your 2025 return after you actually have your 2026 Form 1099-R in hand.  OR   You can report it now in your 2025 return and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding.  Then you must enter the 2026 Form 1099-R into the 2026 tax return since the withholdings are reported in the year that the tax was withheld.  The 2026 code P will not do anything to the 2026 tax return income but the withholdings will be applied to 2026.   If you wish to report the Form 1099-R now as part of your 2025 return without amending it later, go to the use these steps:     Go to Wages and Income > Retirement Plans and Social Security > Form 1099-R section of your return to add a Form 1099-R Select "I'll type it in myself" Box 1 enter total distribution (contribution plus earning) Box 2a enter the earnings Box 7 enter J and P Click "Continue" On "Is the IRA/SEP/SIMPLE box on this 1099-R checked?" screen answer "No, the box is blank"? On the "Which year on Form 1099-R" screen say that this is a 2026 Form 1099-R. Click "Continue" after all 1099-R are entered and answer all the questions. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return". @sselitser  @smags 

If you have not already filed replace the information in your original W-2 with your corrected W-2. If your return has already been accepted and the corrected W-2 would change your tax liability amend your return.