It's likely not an error in the software....but an error in the way you indicated what state(s) the $$ came FROM. In the software, You might have indicated that all of the tax-exempt $$ came from NY bonds, when in fact it came from a number of non-NY states.
The data you download directly from the issuer/brokerage does NOT automatically indicate what states issued the tax-exempt bonds you (or the mutual fund) owned. You have to enter that information separately during the interview. Most commonly, during the software interview, folks just indicate that the $$ came from "Multiple States" if the $$ amounts are relatively small....then it all shows up as being taxable by your home state. The only time you indicate that it was from NY bonds...is if the $$ in-fact came only from NY bonds.
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Yes, you do have the option of breaking out just the NY-bond $$ from all the other states tax-exempt bond $$, but doing so requires YOU to do the calculations from the data the brokerage/fund provides you. In my state (NC) if I get $1000 tax-exempt $$ from a mutual fund, and the fund tells me that 2% of tax-exempt $$ for the year, came from NC bonds...then that's $20 I can break out as coming just from NC bonds...and doing so saves me $1 in NC taxes since NC would have taxed that $20 at 5% if I hadn't excluded it. Big bucks for my efforts eh?
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
