NYS Adjustment for US Obligations & Market Discount

[MJ2024]

I received a large amount of interest income from US obligations that TurboTax should as an adjustment to my NYS income tax return as not subject to tax.  On the federal return, Schedule B, the accrued market discount on three Treasury notes I purchased that matured in 2023 are also included as interest and reported as separate items.  The accrued market discount does not appear as an adjustment on the NYS income tax return.  Should it also be excluded from NY taxable income? If so, do I have to make the change manually?

[AmyC]

Yes excluded, yes change NY. The accrued discount is still interest on federal obligations and not taxed by NYS law. You need to go through the NY return to make the adjustment. It will show on IT 201 line 31, not 28, which could be confusing. Follow these steps:

1. Open you return to NY
2. Continue through to Changed to Federal Income
3. Locate Investment adjustments
4. Select exempt income from US government or exempt by NY law
5. Enter the accrued interest

IT 201 shows on line 31