Turbo Tax Entering Treasury Department Tax Free Interest in Virginia into My State Return

[raz7149]

Turbo Tax is overstating my State income in Virginia by adding Treasury Department interest in the additions sections of the Virginia State return (Line or Row 2), overstating the State Income by the amount of Treasury Interest.  Long-time user.  Have never had this problem before.

[baldietax]

I'm not seeing that behavior on Mac Premier with VA state.

What's the source of the Treasury income, INT Box 3 or something else?

What version of TT are you using, Desktop or Online?

[TBTX1]

I am experiencing similar behavior. 1099 div, part of that is from US treasury. I flagged and entered the amount in federal return, then I go to VA and put the same amount. If I do, it actually increases my VA tax burden. It should be the other way. Anyone? TT, please clarify.  

[baldietax]

@TBTX1 same response, not seeing any issue with this behavior (on Mac Premier)

are you using desktop or online?

what do you mean "then I go to VA and put the same amount."

by "I flagged and entered the amount in federal return" did you check the box for the 1099-DIV to indicate it has US Gov Obligations and enter the $ amount.

[TBTX1]

I'm using online version. 

Part of my 1099 DIV is from US Govt interest. I put the amount in the Federal side. Then I go to my state, VA, Under Exempt US Bond Income section. when I put the same amount it increases VA tax due amount. Am I doing something wrong? Please help.

[baldietax]

"Exempt US Bond Income" is the other way around - US Obligations that are Federally exempt but VA taxable - I don't have access to VA online only desktop but the help popup for this line refers to "income from interest or dividends on US obligations (bonds) or securities that is EXEMPT from federal taxes, you'll need to add that income, minus expenses, to your VA state return"

I'm not sure offhand what type of bond this would be as munis are not "US obligations" and muni additions for issues taxable in VA are covered automatically from the Fed return 1099 data.

The only scenario I've encountered needing special handling for Treasuries has been the treatment of Accrued Market Discount on discounted Treasury Notes reported on 1099-B which gets added to ordinary income but does not get subtracted automatically from state taxes (and there are different interpretations of this state by state).

Anyway - don't fill that in, it should be coming automatically from your 1099s.  Once you've specified the US Gov Obligation amount on the 1099-DIV that should be flowing automatically as a subtraction to 760 Line 7.  What do you see on that line?  If you don't see anything then I would go back over the 1099-DIV.