Issue with State Return for Tax Exempt Dividends

[taxquestion1232]

Greetings all, I am having an issue with my state return in Turbo Tax, specifically with a national muni fund.

Since it is a national muni fund, the interest is taxed in my state (except a small percentage, which can be ignored for this). In the state return form, I need to uncheck the box which reads 'This interest is tax exempt...'. If I do this, Turbo Tax calculates the right amounts, and we are all good. When I try to file, the software automatically rechecks the box, thus INCORRECTLY exempting the interest from state taxes. Not matter what I do, the software will not allow me to file my states taxes with this box unchecked. It seems like a technical bug/glitch. Anyone else see this before?

[taxquestion1232 · Accepted solution]

This issue was resolved by deleting and reentering the DIV-1099. The issue is caused when changes are made to the DIV-1099 tax exempt interest field when the interest is tax exempt in some states but not others.