Interest on federal obligations

[fredf006]

Where is interest on federal debt obligations deducted from my federal adjusted gross income to compute my Minnesota adjusted gross income?

[JohnW152]

This interest is reported as a subtraction on line 18 of Schedule M1M, Income Additions and Subtractions, then carried to line 7 of Form M1, Individual Income Tax.

[fredf006]

I understand that the deduction from Minnesota State AGI for interest on federal debt is accomplished through form M1M.  My question is, "How do I tell TurboTax that the income on a form 1099-INT is interest on Federal Debt so that it generates the entry on form M1M?" I used the TurboTax Premier tax interview and never saw that it asked for that information and it never generated form M1M.

[DianeW777]

The entry is generated from Form 1099-INT by an entry in Box 3, Interest from US savings bonds and Treasury obligations.  Once an entry is populated in that box, then it is auto-generated in the Minnesota (MN) tax return.  It will show up on the Adjustments Summary page.

If your 1099-INT does not have an entry in Box 3, then it would indicate this interest does not qualify for the tax-free treatment on the MN state return. It is not a direct entry on the MN return when there is no amount populated in the Box 3 slot.

An example of the MN page is shown below.

[Derek G]

I had the same issue. Turbo Tax was not deducting the Goverment Bond interest from my state taxable income. But then I realized I'd entered it as interest in Box 1 on the 1099-INT and not Box 3. So I corrected it and moved it to Box 3. Unfortunately Turbo Tax did not recognize the change and it was still taxable. I had to delete the 1099 AND the state tax return (https://ttlc.intuit.com/community/state-taxes/help/how-do-i-clear-my-state-return-in-the-turbotax-fo...) and then re-enter the 1099-INT using Box 3 and then start the state return from scratch. Then it correctly deducted it. Not sure if this is the situation you are experiencing, but this is how I got it to work! Now I see the deduction correctly as shown in the previous example shown.