Alabama Form 40NR

Forum|Forum|10 days ago
September 27, 2026
3 replies
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I am preparing an AL 40NR. The Federal return includes certain US Government iinterest that is supposed to be tax exempt in Alabama. However, I cannot find a spot to enter this information in Turo TAx. All of the income is on a K-1 from an Alabama LLC. I am not sure where Turbo Tax wants me to account for that non taxable Alabama income?

Thank you

M-MTax

Level 15

To account for non-taxable U.S. government interest from a pass-through entity (LLC) on your Alabama Form 40NR, you need to adjust the numbers during the State tax interview section of TurboTax rather than the Federal Schedule K-1 screen.

M-MTax

Level 15

Go to the State Taxes Tab: Begin your Alabama State Return interview.

Navigate to the Business/Pass-Through Income Section: Proceed through the interview screens until you reach the summary of your pass-through income or the screen specifically addressing "Alabama Schedule K-1 adjustments" or "Partnership/LLC income adjustments".

Adjust the Alabama-Sourced Income: TurboTax will present a screen showing your Federal K-1 values alongside boxes for "Alabama Amount" or "Alabama Taxable Income" (which maps directly to Column C on your Form 40NR).
- Manually subtract the U.S. Government interest amount from the Alabama ordinary/portfolio income box.
- Enter the net, lower figure as the Alabama-Sourced Income.