No, they want to know which state your tax-exempt interest came from, i.e. your investment account had tax-exempt bonds issued by state or local governments.
When you get this message, either a 1099-DIV or 1099-INT is reporting tax-exempt interest/dividends and the program wants to know what state you got them from. (This information is needed for state returns only).
You may not be able to "find this" and you probably don't need to.
The quick fix for this issue is to enter "XX" as the state ID in SmartCheck screen. "XX" stands for "More Than One State" in this screen.
If you are still in the 1099-DIV (or 1099-INT) interview, you can select "More Than One State" from the state drop-down menu (last choice). If you have supplemental information with states and amounts, you can check the Box (I earned tax-exempt interest from more than one state), and you will be able to enter the individual state information).
If you are unable to fix this in SmartCheck or the 1099-DIV (or 1099-INT) interview, you will have to delete the Form 1099-DIV (or 1099-INT) and re-enter it in the 1099-DIV (or 1099-INT) interview. If there was a "0" in Box 10 of 1099-DIV (or Box 8 of 1099-INT), leave the field blank and you won't need to enter a state abbreviation.
