"While I was doing California State Tax return, Turbo Tax software indicated " Tax exempt interest from California sources of dollars xxxxx transferred from my federal tax return. This led to a refund from the State . It has been more than 5 weeks, I have not received any refund. Did I do something wrong here. I followed what Turbo Tax told me to. Can someone advise me here, please
Such federal tax-exempt dividends are not always tax-exempt for state. State-taxable dividends often come from mutual funds or Exchange Traded Funds (ETFs) that hold a multi-state portfolio of municipal bonds. All of the income from those bonds, other than those issued within your home state, are taxable by your home state. Thus, we need to "adjust" the Form 1099-DIV, Box 10 entry to account for that fact for your state return. The percentages are included with the information that comes from the financial institution holding your funds.
In TurboTax, this is manually done in the 1099-DIV interview. The specific numbers you use will be based on the percentages that are provided with the Form 1099-DIV, so you can make the appropriate adjustment(s) to your exact circumstances.