Virginia tax on US Saving Bonds

[Booglw]

Virginia exempts interest on US Savings Bonds Turbo Tax does not so how to take that exemption  Is it under the subtractions to federal income?

[BillM223]

When you enter the 1099-INT into TurboTax on the federal return, there is a box that reads "Box 3 - Interest on U.S. Savings Bonds and Treas. obligations".

Any amount put in here is added to "Virginia Subtractions" on the VA return, so the interest on U.S. Savings Bonds is automatically removed from VA taxable income.

[hickory248]

After submitting my Virginia tax return, I noticed that you added the amount for US savings bonds (Additions) and also subtracted the SAME amount (Subtractions).  Since the amount was added on the federal taxes previously, it should NOT have been added to the state form.

[BillM223]

In my test, US Savings Bonds interest appears only as a Subtraction on Schedule ADJ (line 4).

Can you tell me on what line this same interest appears on Schedule ADJ as an addition?

[hickory248]

Line 2b and there is a 10 after the 2b

[BillM223]

@hickory248

Is that 10 a dollar amount or is it referring to line 10 on the Other Additions Statement?

If it is appearing on line 10 of the Other Additions Statement, this suggests that you entered it both as US Savings Bonds interest (which is why it appeared as a subtraction) and as tax exempt interest on the federal return (the addition).

Did you check on of those boxes on the screen immediately after entering the 1099-INT? Where it says "Tell us if any of these uncommon situations apply?"

And did you enter the interest in only one box (box 3) on the 1099-INT screen itself?

[hickory248]

No uncommon situations boxes checked.  Yes the only place the interest shows is on box 3 of the 1099-int.

I may have put the interest in the wrong place on the Virginia tax form, come to think of it.

[BillM223]

Hmmmn, I don;t think I put the US Savings Bond interest anywhere on my Virginia return. Let me know if that is it...

[hickory248]

No.  That is not it.  After redoing my federals I mistook the statement where it said about adding tincome from federal free income.  Like municipal bonds. 

[BillM223]

So you are saying that the Savings Bond interest is still appearing as both an addition and as a subtraction?

[hickory248]

No.  I misread the statement about taxes that were exempt from federal income but taxed by state(s).

[Yatnola]

I’m having a problem with this. The exempt box is not active on my federal return. How do I put the savings bond number into it?

[AnnetteB6]

Please clarify what you are trying to do with your savings bond interest and which state return you are filing.  With more details, someone can provide you with a more complete answer.  

Only certain states do not tax US savings bond interest.  Those states are listed in the Federal return after you have entered the interest income you received.  If your state is not on that list, then you may need to add the interest income to your state return, not subtract it.

@Yatnola 

[Yatnola]

Good Evening,

I'm sorry, I don't have any confusion. I think there is an error in Turbo tax.

According to the Commissioner of Tax for the Commonwealth of Virginia, there is no tax on US Saving Bonds. Please see his message:

https://www.tax.virginia.gov/[product key removed]ions/rulings-tax-commissioner/94-281

Please have the Turbo Tax CPAs double check this and issue an update to the application.

Thanks in advance for your kind attention.

[SteamTrain]

@Yatnola 

You are supposed to be putting your Savings bond interest into box 3 of a 1099-INT.

When entered there, it is included in the Federally-taxed interest on the form 1040, but it should automatically be deducted from VA income.  (If the software is working right....line 4 of the VA Schedule ADJ).

Savings bond interest does not go in box 1...nor in box 8 of a 1099-INT form.