Iowa tax return error - Tbill/savings bond interest should be on Iowa 1040 Schedule 1 column B. My Tbills are being subtracted from Muni bonds and net is in Column A?

[DaveF1006]

Yes, you are absolutely correct: U.S. Treasury interest should be a Subtraction in Column B, not part of a net calculation in Column A. To force the software to report these correctly on Schedule 1:

1. Go back to the Federal 1099-INT entry.
2. Split the entry into two: Instead of one 1099-INT for that bank/brokerage, create two.

• Entry 1: Enter only the Box 1 (Taxable Interest) and Box 3 (U.S. Treasury) amounts.
• Entry 2: Enter only the Box 8 (Tax-exempt/Muni) amounts.

In the State Interview: When you reach the Iowa "Interest Income" section, TurboTax will now see them as unique items.

• Mark the Muni bonds as "Other State" (if applicable) to send them to Column A.
• Mark the Treasury interest as "U.S. Government Interest" to send it to Column B.

After making these changes, close your your return and then open it up again to see if the correct amounts are shown in columns A and B in the Iowa state return.

[turbokarst]

This seemed like a good idea but no workie... I already have my 1099-INT with just the Box 1 (Taxable Interest) and Box 3 (U.S. Treasury) amounts ONLY (as you suggested). My muni bond interest is over on 1099-Div in box 12 so it is already separate. To test, I first whacked the muni-bond dividends from that 1099-Div and as expected, the correct T-bill interest showed up in Schedule 1 line 1 column B as expected and correct. I then created a new 1099-Div with just the munibond dividends and we went right back to getting a net amount munibonds - Tbills in column A (since munis amount slightly greater than Tbills). I'm also a little squeamish on tricking the code as my resident MN return handles munibonds and Tbill correctly. I don't want to trick Iowa and end up with a MN problem. I'm not sure if your comments on state interview. Why don't we just fix the code in the Iowa return to eliminate the net math calculations it is apparently doing and just put the numbers in the correct columns they way Iowa devised the form? The MN return seems to handle the same basic calcs (add back munibonds minus US Govt interest) I'm (reluctantly) using Premium on-line as was forced over with a windows 10 system.

[turbokarst]

Guess I'm replying to myself but since I'm non resident of Iowa my "Iowa source" income and dividends are zero (in order for the non-resident credit to work properly) so it really doesn't ask me much about the income.  I do properly break the muni-bonds dividends up into multi-state and iowa back in the federal/main input section.  I do appreciate the help as I have been spent 4 hours on phone this week with tax experts and sent in two diagnostics files and TTax can recreate the problem, just can't seem to fix the bug.