I purchased an I bond when living in the state of GA in 2022. When I redeemed it in 2023, I lived in the state of NC. I redeemed early and had to forfeit the final 3 months of interest on the bond. Those 3 months would have been NC interest if I use my relocation date. Does this interest count as GA interest only or NC? Do I allocate this like bank interest, and it is reported in the state I lived in when the interest was paid (which would be NC)? I couldn't find any information on this topic.
Generally you report such things to the state you were living in at the time of disposition. Since you were living in North Carolina at the time of disposition, report it there. Of course, this will be reported on the federal return, so the income will flow through to the state.
Are you doing a GA part-year return? Is TurboTax specifically asking about this?
I am doing a part year GA return. Turbotax prompted me to split all of our income by state and that's when I thought about the I bond interest - the screen where you split the income lumps this together with other interest as one number, so I am going through each item on a spreadsheet and trying to allocate it to the right state. Thanks for your reply.