When you enter the 1099-DIV on the federal return, you will come to a screen headed "Tell us if any of these uncommon situations applies to you". Check the box that reads "A portion of these dividends is US Government interest". Click Continue.
On the next screen, enter the amount of the dividends that represents dividends from US Government obligations.
When you get to the Maryland return, you will see a screen headed "Interest/Dividends from U.S. Obligations are Tax Free". This screen will confirm that these dividends are not being taxed in Maryland.
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