DC return doesn't prompt for taxable interest from US Treasury bonds, etc.

[Kirue]

This is a workaround rather than a question, but I hope someone at TT notices this and corrects the software. 

For the 2023 District of Columbia state return, TT Deluxe no longer prompts for US Treasury obligation interest as a subtraction to Federal AGI.  This is interest that's subject to Federal tax but is usually exempt from state tax.  It isn't summarized on the front page of brokerage 1099s but can usually be found in the mutual fund section as a percentage of interest payments.  In the past TT specifically prompted for this amount in the subtractions to income portion of the program and then generated a Schedule I (as in "eye").  Now, unless you have other prompted-for subtractions, the only way to generate a Schedule I is to enter the amount under "Other subtractions to income" (or however it's worded).  Then you can go into forms view, open the Schedule I, and manually move the amount to Calculation B, line 1 so that the DC tax people know what the heck the deduction is for.

[Hal_Al]

U.S. Treasury interest must be entered in box 3 at the 1099-INT screen, in the federal section of the program.   When it is entered there, TT will automatically make the deduction on the state return. There is no other way to make the adjustment. 

Be sure that the US Treasury Interest in entered in box 3, at the 1099-INT screen.  When you first see that screen, check the box "my 1099-Int has more than just a box 1", to get access to box 3. 

[Kirue]

But the brokerages don't report the amount in Box 3, so it would create a discrepancy with the Federal tax return.  That's because the amount is actually the portion of interest from Treasury obligations that is included in mutual fund dividends.  And, yes, it's legitimately deductible in DC.

[Hal_Al]

Q.  That's because the amount is actually the portion of interest from Treasury obligations that is included in mutual fund dividends.  And, yes, it's legitimately deductible in DC.

A. In that case, the entering technique is a little different. It's still entered in the federal section of the program. After entering  the 1099-DIV, a later screen will ask "Tell us if any of these uncommon situations apply to you". Check the box "A portion of these dividends are U.S. government interest".  The next screen will give you a box to enter the amount.  That will automatically transfer to the state return as a deduction. 

[Kirue]

Thanks, Hal_Al.  I never saw that prompt in the Federal return because I uploaded my brokerage DIV data electronically and didn't go through the step-by-step process.  It's certainly a more elegant way of entering the taxable interest from government obligations!  I'll make a note in my annual "read me" document so I'll remember how to do this next year.