Treasury Interest is being added to my Virginia State Tax Return

[raz7149]

My treasury bill interest for my 2025 Federal taxes is being added to my 2025 Virginia state taxes.  I've never had this problem before.  I am using Box 3, not Box 1.  I've read, and tried, all the suggestions in this forum.  I've used Premier in the past, but am using Deluxe this year.  I have deleted the Treasury Department entry, and re-entered ... same result.

[MelindaS1]

You'll update this in your state tax return entries, not the federal interest income menu. 

Navigate to: Tax Home > State Taxes > Virginia > Edit/Continue 

• The first screen that loads in the state interview will be headed, "Here's the income that Virginia handles differently",
• From here, scroll down to "Other Subtractions from Federal Income" to enter your state-non-taxable Treasury interest. 

See also: How do I preview my TurboTax Online return before filing?

[raz7149]

Thanks Melinda for your prompt response. I think that section is working. Been using Turbotax for years, and have checked several older returns. What I see differently is the treasury interest is being added on line 3 as an addition, which then increases my total state baseline. So, when I subtract the treasury tax once, I get back to what my income baseline should be, then I have to subtract it again to get the taxable Virginia income minus the treasury interest. The problem is in the treasury interest in line 3 in "additions" to Federal Gross Income.

[raz7149]

Correction to my last post.  The treasury interest is being loaded into line 2 of the Virginia state return when then overstates my Virginia taxable income.

[AmyC]

Follow these steps since line 2 additions is not line 3 subtractions:

1. Let's enter your 1099 a little differently.
2. Open to the federal income screen
3. Locate the troublesome 1099
4. Edit and remove the box 3 amount. continue
5. Add a new 1099 using the payer information, etc from the original and leave all the boxes blank except box 3. Continue do not check to adjust interest. Do check government interest or my state doesn't tax all of this interest.
6. Now, you have two 1099 forms created from one form. One has box 3, the other has all but box 3.
7. Continue through to your state return and see what happens. It should be correct now.