e-file Minnesota with overrides for US treasury and agency interest

[jdnaylor]

The 1099 received from brokers only account for US treasury interest and do not consider exempt federal agencies like Federal Farm Credit Bank and Federal Home Loan Bank.  Turbotax doesn't seem to have away to input this interest during the federal portion of the program.  So when transferring the exempt amount to Minnesota, Turbotax only carries over UST interest.  Therefore, during the Minnesota return I override the field to add in the extra agency interest that is exempt in Minnesota.  Now when attempting to Efile, I get rejected due to the override.  Turbotax says I need to change it on the federal return, I don't see a way to do this.  Or do I need to paper file Minnesota?  Already input credit card info and paid, don't see a way to go back and paper file now???  Advice on how to proceed?

[MaryK4]

The Federal Home Loan Bank (FHLB) & Federal Farm Credit Bank (FFCB) bond interest is included in 1099-INT and part of Box 1.  If you change it to Box 3 on the 1099-INT, it will get subtracted from Minnesota taxable interest on Form M1M Line 14 and you will be able to e-file.  See U.S. Government Interest.

[jdnaylor]

Here is another problem you have with Turbotax:  Treasury bills (not bonds, just one year bills) are issued as zero coupon instruments and reported on 1099B with a line f deduction for interest.  This carries over fine on the federal return and goes to interest on Schedule B, but Turbotax does not see it as US interest that is exempt from state tax and does not carry it over to the state return as a deduct to taxable income.  You need to add a choice when inputting 1099B line f asking if this is UST interest and make it carry over to state returns.  

Example: you might buy a one year tBill with face of $100K for about $97K.  When it matures it shows up on 1099B as asale at $100K with a basis of $97K for a $3K gain, but this is corrected by the line F entry of $3K, making the gain zero and putting the $3K into interest.  But Turbotax does not see it as federal UST interest.