Interest on Out-of-State Municipal Obligations. Not sure why my return is asking me about this as I don't do anything out of my state? Is this for unemployment?

Some states do not tax the interest from municipal bonds issued in their state but do tax the interest in municipal bonds from other states.

Did you enter one or more 1099-INTs? Did you indicate that the amount was not taxable?

If you did not have any municipal bond interest from out of state, just answer the question and move on...and then be sure to look at lines 2a and 2b to make sure that report what you think they should report.

For details on how to enter, see:

https://ttlc.intuit.com/community/state-taxes/discussion/re-exempt-interest-dividends-are-entered-from-form-1099-div/01/1318344/highlight/false#M58913

Most particularly, see the screen shot at that link.

you can live in any state and that state's laws cannot prevent you from buying a municipal bond issued by another state or a political subdivision thereof