1099-DIV Tax Exempt Dividends box 12 not properly transferring to NY State for taxable portion IT-201 Line 20

[jtaxuser]

I have Tax exempt dividends in 1099-DIV box 12 for a NY State Tax free fund.   I listed the portion the fund has listed as sourced from New York and other small amount sourced from other states as Multiple States.  The data transfer to TurboTax NY State tax forms does not transfer and add the taxable portion to IT-201 New York additions.  Isn't it supposed to add the taxable portion (non-NY sourced) to IT-201 line 20?

This seems to be a bug in TurboTax and it's handling of the data from the federal return and not populating the NY state return correctly. 

If the 1099-DIV section has earned exempt-interest dividends in more than one state for example as this:

New York              $95

Multiple States     $5

TurboTax NY state should take the $5 Multiple States and other non-NY state entries and add it to IT-201 New York additions line #20 Interest income on state and local bonds and obligations (but not those of NYS or its local governments).  TurboTax is not doing this at all.  In fact the TurboTax NY State software says this is taken cared of and transferred from the federal data in the section that says "Federally tax-exempt U.S. obligations that are taxable in NY".  When I open that section there is a box to enter other amounts not Federally taxed but taxable for NY.  The top of the section says "

State taxable interest or dividends

TurboTax automatically makes the necessary adjustments for municipal bond interest earned on non-New York bonds based on entries you made in the federal part of the program. Enter any other interest or dividends that are exempt from federal tax, but are taxable in New York."

I would expect this to mean it would have taken the non-NY entries in the federal and handled it already.

[baldietax]

are you on desktop or online?

if desktop go to Forms mode and the 1099-DIV and below the grid of muni state breakdown for Box 12 there is a line "State where the dividends were earned" which should have XX rather than NY regardless of what's happening on the grid above.  it's a bug somewhere in the easy step entry which sets this incorrectly.

[SteamTrain · Accepted solution]

@jtaxuser 

@baldietax     Probably referring to this:

1)   go back to that page in the interview, where you made the division and select the FIRST button.

2)  Change that "One State" selection to "Multiple States",  (at the bottom of the list of states)

3)  Re-select the second button and ensure your prior breakdown settings are still correct.

4)  You (might) have to hit the "Continue" at the bottom before that change taxes effect.

But pay attention to the NY Refund/Tax Due as you change the settings to see if it appears to have worked..  

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OR.....if you have Forms Mode, check that 1099-DIV worksheet.

(MY example is for an NC Resident)

Check that the bottom state code in the picture below MUST BE set at "XX" and not "NY"  in order for the breakdown table to be used.

(Though, that is for Windows desktop users.   MAC users might be "XX" or "MX" as I don't know which code MAC software uses now).

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i.e.

[jtaxuser]

Hi @SteamTrain  and @baldietax ,

  I am using TurboTax Desktop for Windows.  I thought it would have shown up in the post. I had to repeatedly enter the platform every time I edited the post, so it might have reset on the last update.

   Wow, that is a weird bug.  So basically instead of resetting that last option to Multiple states or a specific state when flipping back and forth, the Multiple states option does not get updated.    Thank you for the picture and explanations as it helps understand what was not changing with this bug.  I will try it out and report back. 

[jtaxuser]

Thanks @SteamTrain and @baldietax.  Issue resolved.  Had to change that first question or option to Multiple States as indicated in the explanation.  The forms screen shot was very helpful as I was able to see the XX in the field instead of NY.  Also the correct total was transferred to the New York form IT-201 line 20 for the amount to be added that is not NY Tax exempt.