My K-1 reports interest and dividends income. Part of that income is from US Government obligations. Where to report the later one?

[IreneS · Accepted solution]

In the CD/Download versions of TurboTax you can indicate that income on the K-1 is from U.S. Government obligations by following these steps:

  Schedule K-1 (Partnership)

1. Click on Federal Taxes > Wages & Income   ,
2. Under Business Items, click on the box next to Schedules K-1, Q.
3. Click Yes on the next screen, Schedules K-1 or Q.  
4. On the Tell Us About Your Schedules K-1 screen.  Click on the Start/Update box next to Partnerships/LLCs (Form 1065). 
5. If you have already entered K-1 information, you will see the Partnership/LLC K-1 Summary screen.  Click Edit to continue with the existing form entry.    
6. If you haven't yet started entering K-1 information, continue through the screens, entering the requested information.
7. On the screen, Check Boxes That Have an Amount, be sure to click Boxes 4-7.    
8. On the screen, Enter Information from Boxes 4-7, enter the Interest Income on the line for Box 5 .
   
9. Enter the interest from US. obligations in the box directly below box 5 - Interest from U.S. Obligations in Box 5. 
10. Boxes 6a, 6b and 6c are for dividends.  The box directly below box 6c is for Interest from U.S. Obligations in Box 6.
    

Schedule K-1 (S-Corp)

1. Click on Federal Taxes > Wages & Income   ,
2. Under Business Items, click on the box next to Schedules K-1, Q.
3. Click Yes on the next screen, Schedules K-1 or Q.  
4. On the Tell Us About Your Schedules K-1 screen.  Click on the Start/Update box next to S-Corporations (Form 1120S).
   
5. If you have already entered K-1 information, you will see the S-Corporation Summary screen.  Click Edit to continue with the existing form entry.    
6. If you haven't yet started entering K-1 information, continue through the screens, entering the requested information.
7. On the screen, Check Boxes That Have an Amount, be sure to click Boxes 4-9.   
8. On the screen, Enter Information from Boxes 4-6, enter the Interest Income on the line for Box 4 .
   
9. Enter the interest from US. obligations in the box directly below box 4 - Interest from U.S. Obligations in Box 4. 
   
10. Boxes 5a and 5b are for dividends.  The box directly below box 5b is for Interest from U.S. Obligations in Box 5a.
    

[YennyL]

Hello,

I've entered the total interest in K-1 box 5 plus the amount associated with US government interest below box 5.  I was expecting to see the US interest flow thru to Form 1040 box 2a (tax-exempt interest) but it did not.  Is there somewhere else that needs to be populated in order for TT to recognize it should be tax exempt?  Perhaps in schedule B, line 3?