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Level 2
posted Mar 17, 2024 8:45:27 AM

How to enter federal agency tax exemption in Minnesota

TurboTax doesn't seem to have a way to adjust interest on Federal Farm Credit Bank and Federal Home Loan Bank interest.  My broker 1099s all come with just US treasury interest broken out, the FFCB and FHLB interest is lumped in with regular interest.  TurboTax doesn't seem to have a entry in the Minnesota return to add this interest to UST interest as not taxable in Minnesota.  For right now, I just went in and did the override on form M1M to increase the exemption to the right amount.  Am I missing something?  Worried the override might trigger an audit?

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1 Replies
Expert Alumni
Mar 17, 2024 1:06:20 PM

You're not missing anything.  This can't be identified as an "uncommon situation" for Minnesota when entering your interest in the federal portion of the program, and there doesn't appear to be a way to create the necessary subtraction in the Minnesota part of the program.   

 

Instead of overriding the information on Form M1M, you could achieve the same (state non-taxability) result by entering this interest in Box 3 of the Form 1099-INT you entered on the federal portion.  Reporting-wise, though, that's not necessarily preferable to the override you're doing.  The unaccounted for amount in Box 3 could raise eyebrows, but the override you performed shouldn't.

 

See Agencies Issuing Exempt Obligations on the U.S. Government Interest page for qualifying subtraction information.