Adjusting federal interest income for State taxes in Turbotax

[Fou65000]

Hello,

For my 2024 PA State taxes, I will file as a part-year resident as I was in the state the first 10 months of the year and I was overseas the last 2 months (new domicile). I only have interest income in 2024 (no earned income) and it is made of $67 regular interest (taxable by my state) and $5634 US government interest/bonds (not taxable by my state). Total of $5701 interest income for 2024.

Here is my problem. Looking at my brokerage account statements, during the last 2 months of 2024 when I was not resident of my state, the only income I received was $1 of regular interest income (out of the $67 total regular interest income for 2024. No US governement interest was received during the 2 months not PA resident.

For State taxes, I am trying to deduct this $1 from my $67  interest income (Regular Interest in Turbotax). Turbotax does not let me choose from what kind of interest income I can deduct this $1 (regular interest or US governement interest). Here is a screenshot of the page:

When I chose Yes, the following page is:

Problem, if I enter $1 in the Adjustment amount, it deducts it from the US Governement interest amount and not from the Regular Interest (which is what the $1 dollar corresponds to).

Therefore at the end, my taxable state income is still $67 and not $66 (which is what it should be after the $1 deduction). On the other hand, my US government Interest becomes $5633 instead of $5634 (the $1 deduction was applied). It should be the other way around.

- Is there something I am doing wrong? I know $1 won't change my state taxes but I would like to do things right.  How can I fix that?
- Also, what type of Adjustment should I select in the list provided on the right hand size (see screenshot above)?

Thank you for your help!

[Fou65000]

Any help? Thank you in advance.

[BrittanyS]

To make the adjustment you will need to click the edit icon next to Regular Interest.  Then enter the $1 adjustment and mark as other adjustment.  See screenshots below:

@Fou65000 

[Fou65000]

Thank you for your answer. I have been doing this already but this is where I encounter a problem with Turbotax. Please see my screenchots below when I do exactly what you instructed:

After I click the edit icon, this is what I get:

After selecting Yes and clicking continue, this is what I immediately get:

TT will just let me adjust the US government interest but not the Regular interest income. There is no way to remove the 1$ from the $67 Regular interest. TT automatically assumes I need to remove the 1$ from the $5634 US government interest but this is wrong and not corresponding to my tax situation.

[BrittanyS]

Can you clarify if the regular interest was enter as an import?  If it was imported, that could be why the edit function is not available.  Delete the import and manually enter the 1099-INT and this should allow you to make adjustments when you go to your state return.  

@Fou65000 

[Fou65000]

I uploaded my 1099-INT as a PDF file, I did not enter the values manually. I will start from scratch with my federal rerurn and enter my 1099-INT manually. Should I do as if I have received 2 different 1099-INT from the same brokerage, one for the Regular interest and one for the US governemnt interest, although the interests are on the same 1099-INT? Maybe like this, TT will allow me to edit each interest independently?

[Fou65000]

Okay so I think I have solved the issue. I did as if I had received two different 1099-INT from the same brokerage (although I received only 1) and manually entered 2 different 1099-INT:

- one for the 67$ Regular interest (I entered only Box1 amount of my 1099-INT)
- another one for the $5634 US Savings bond (I entered only Box 3 of my 1099-INT).

Later on for my State taxes, I was then able to deduct the 1$ amount from my Regular interest of 67$ (earned while out of State). My final taxable state income is now 66$ instead of 67$ (it does not change the amount due though).

Here are the screenshots showing what I did:

Is this the correct way to do? Can I file my returns as it is now?