First - do you know how much of the interest is exempt in NY? If this is on line 1a of the 1099-DIV, you will need to find out what percentage is due to Federal "Direct Obligations" which are tax exempt at the state level. If this is on line 10 of the 1099-DIV you will need to find out what percentage is due to NY Muni bonds. In both cases, you get that info from the mutual fund vendor.
NY has restrictions on the percentage they allow so you need to make sure you are within its limits.
Once you have figured out the dollar amount that is exempt in NY, you need to edit the 1099-DIV using the Turbo edit tool.