You
get the break down, by state, from your mutual fund company. If they did not provide a breakdown,
you check the box “I earned tax exempt dividends in more than one state” on
the first screen after entering the 1099-INT or 1099-DIV. Then select
"More than one state" at the bottom of the state scroll
down list.
If
your mutual fund company provided you a breakdown, you are only interested in
your home state*. Multiply the % for your state by your total tax exempt
dividends to get a $ amount (you can't enter the % in TurboTax [TT]). When
asked which state, check the box "I earned tax exempt dividends in more
than one state". In the drop down menu, select your state and enter the $
amount you calculated. In the 2nd box, select "More than one state"
(at the bottom of the scroll down list) and enter the remaining dollar amount.
*Your
state will tax all the dividends except the dividends from municipal bonds
from your state.