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Returning Member
posted Jan 22, 2025 3:57:36 AM

Have others had a problem with the Virginia return where it is miscalculating taxes because it is inappropriately adding tax exempt interest on EE savings bond to income?

Turbo tax handled this correctly for my 2023 return, but the software is NOT handling this correctly for my 2024 return. There is an error in the software. Who can help with this???

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15 Replies
Level 8
Jan 22, 2025 4:16:08 AM

Not seen an issue (using desktop premier for Mac), 1099-INT Box 3 is not adding to VA tax.  Not sure what to suggest other than to confirm on Fed return in Forms view under Schedule B in the 1099 that it's reflected in Box 3.

Returning Member
Jan 22, 2025 4:34:18 AM

I just verified that I entered the interest on the savings bonds in box 3 as suggested, however the software is still adding it to income (which is incorrect) as well as deducting it from income (which is correct) on my Virginia return.  So it seems that the software is not working correctly. 

Level 8
Jan 22, 2025 4:41:47 AM

pls can you clarify when you say "adding to income (which is incorrect)" which line on Form 760 are you referring to.  It should be part of your Federal income on Form 760 Line 1 and then subtracted on Line 7.

Returning Member
Jan 22, 2025 4:58:09 AM

on the VA 760 it is adding the tax exempt interest on line 2 as an addition to Federal AGI on line 1 which wrong because it is double counting the interest (since it is already included in the Federal AGI.   This is the incorrect part.  It should NOT be an addition to income.  However, it is also showing the deduction for the exempt savings bond interest on line 7 as a deduction to Federal AGI which is correct.  So it is the addition to income on line 2 which is the problem.

Returning Member
Jan 22, 2025 5:01:22 AM

for clarity it bleeped my abbreviation for Federal Adjusted Gross Income

Level 8
Jan 22, 2025 5:04:04 AM

ok agree it shouldn't hit Form 760 line 2 and I've not seen that happen with Box 3 income.  The only other thing I can suggest is it check you don't have anything in your 1099s under Box 8 which would be flowing to Form 760 line 2 as muni income taxable in VA.

Returning Member
Jan 22, 2025 5:13:39 AM

I double checked and there is the box 8 amount is zero.   So again the software appears to be working incorrectly.  How do I report this apparent bug in the software???

Level 8
Jan 22, 2025 5:50:49 AM

Are these bonds included in 760 Line 1 Federal AGI - did you do anything else with the input related to savings bonds such as exemption for educational use etc?

 

Couple other things I would try before going down the "report a bug" path to confirm it's not some data issue in your return - input a test 1099 (and delete it later) with only simple Box 3 income and see if you get the same effect consistently; and delete the 1099 with the EE bonds and re-input it.

Level 15
Jan 22, 2025 6:42:43 AM

My desktop (download) Deluxe, for windows, is working correctly. 

Returning Member
Jan 22, 2025 6:56:17 AM

Well although I tried deleting and re-adding the 1099 info several times before seeking assistance, I tried again and it now seems to be working properly.  Thanks for your assistance!!!

Returning Member
Jan 27, 2025 5:26:23 AM

yes the problem has been resolved.  Thanks for the assistance

New Member
Mar 16, 2025 7:50:49 AM

I am experiencing this same issue.  Please advise exactly how you fixed it.  

My US EE savings bond interest was taxable at federal level since I did not use if for education purposes.  On VA return, it is added to my income (error) on line 2.  Then deducted on line 7.  Net result, I am taxed at the VA level on this income even though it is supposed to be nontaxable in VA.  

Expert Alumni
Mar 19, 2025 9:57:04 AM

Have you tried deleting and adding the 1099 info back?  Are you using TurboTax Desktop or Online?

 

@GetaFix4Tax 

New Member
Apr 7, 2025 10:33:22 AM

I'm having a similar problem with Virginia.  I put the VA vs. non-VA portion of tax exempt interest income in the Federal input but it is putting a whole different number on the Virginia return as an addition.  I'm not able to change it on the Virginia input.  Help!

Level 8
Apr 7, 2025 11:44:39 AM

you need to provide more details for anyone to help...

 

are you talking about 1099-INT Box 8 or 1099-DIV Box 12?

 

What do you mean by "whole other number" - is it close but off by a small adjustment, or just totally missing the 1099 amount?

 

If 1099-INT do you have any premium or accrued interest adjustments?

 

If 1099-DIV double-check the state assignments in the interview screens following the screen with the box amounts, are split correctly, and the 1099-DIV is not flagged for "needs review" when you look at the list of your 1099s.

 

If you are seeing strange numbers from a 1099 it's worth trying to re-input as a fresh 1099 especially if imported.