Ala Interest Income

[bob36330]

difference in interest -- how to change state amount

[AmyC]

What is causing the difference in interest? What are you trying to adjust? 

[bob363308260]

 Problem 1. Some of federally exempt interest is taxable to Alabama. How do I change just the Alabama entry?

Problem 2. Some of federally taxable dividends are not taxable to Alabama. Same question, how do I access Alabama data to make the change?

Bob Akin

[ThomasM125]

For the federally exempt interest, you will see the following screens in the federal section of TurboTax when you enter the form 1099-INT information, that will allow you to indicate that the interest is taxable to Alabama:

So, you indicate in the federal section of TurboTax that the interest is not taxable on the state return.

I'm not sure how to answer the question regarding the dividends, what federally taxable dividends would not be taxable in Alabama please?

[bob363308260]

That did not begin to address the problem I am referencing. Most of my bond interest is tax exempt for both federal and Alabama because they are Alabama municipal bonds. However, some is taxable to Alabama (not federal) because the bonds are from other states. The 1099-INT shows all non-taxable which is fine for the 1040 but some needs to be classified as taxable for the Alabama Form 40. The TurboTax system does not appear to allow user input to override erroneous carry-forwards of information.

Similar problems arise when the federal requires a Form 8606 and the worksheet in-bedded in the software does not carry forward the correct data. The only way I found to overcome this issue was to prepare an pen-and-ink Alabama return. Nothing the system produced was close to accurate.

[bob363308260]

The reply penned by ThomasM125 missed my point entirely. As to the question on exempt interest dividends, I defer to Box 11 of the IRS format for 1099-DIV.

[ThomasM125]

Sorry that I missed your point!

You can make more that one form 1099-INT entry for the same form 1099-INT. So, to include the taxable interest income on your state return, make a separate form 1099-INT entry for the amount of income taxable in Alabama, and don't indicate that it is tax exempt for your state.

You would do the same for the dividends.