My state of residence allows municipal bond income from U.S. territories and possessions to be state income tax-free, just as it allows municipal bond income from that state's municipal bonds to be state income tax free. I own a state specific municipal bond fund that provides investors with tax information by (1) specific state (2) all other states, and (3) U.S. Territories and Possessions. In 2021, I received income in all 3 categories. There's no break down by specifically named territory or possession. How can I enter this single, consolidated number for territories/possessions into turbo tax deluxe so that I accurately report income received and not have to pay state income tax on the income I receive from the territories and possessions? If I include that income with the income from the specific state, I expect the state will detect the discrepancy. If I include it in the "all other states" category, I end up paying state income tax on the amount. By the way, I contacted the mutual fund company and they say they don't have that information available to investors.
Well, if it were me, I'd just pick Puerto Rico for all of the US Territory amount, as the is the most likely Territory they would have bonds for anyhow. If the state ever Audited you, it would likely be either random, or for something else entirely and you would show them what breakdown the Fund provided, and the state would probably accept it since any territory gets the state exemption.
But if the actual $ amount was small (say, under $40 or so) , and you are uncomfortable with that, you could just lump it in with the other states and take the hit. ($40 of territory interest, taxed at 5% by the state, would be an extra $2 of state taxes...not enough to get excited about)