Turbotax is counting the exempt interest dividend from the box 12 on 1099-DIV as taxable income, how do I fix this?

[eddieho]

This is for 2024. Turbotax is putting the $ in the right place but failed to take it out from the taxable income, therefore my tax liability increased by $143

[AmyC]

The federal obligations in box 12 should automatically be exempted from your state return. Federal obligations are state exempt. State obligations are generally federal exempt.

If you need to make a change:

1. Go back into your federal income
2. Edit the 1099-DIV
3. Select uncommon situation and enter your information.

Reference: Pub 550 US Obligations

[eddieho]

Sorry I should said, turbotax put tax exempt interest from box 12 on 1099-DIV in the right place  - 2a on 1040 form, but it did not take out from the total taxable income.  I live in WA so no state tax involved.  Please help. 

[AmyC]

Federal obligations are taxable on the federal return. They would not come off the 1040. Pub 550 US Obligations states: U.S. obligations.

Interest on U.S. obligations, such as U.S. Treasury bills, notes, and bonds, and obligations issued by any agency or instrumentality of the United States is taxable for federal income tax purposes.

[baldietax]

Box 12 tax exempt dividend going to 1040 line 2a sounds correct, and would not be included in taxable income subtotal on lines 9 and 15.  This is pretty fundamental on the 1040 - can you double check this is what is happening, all other boxes on your 1099-DIV are entered correctly, and nothing else is affecting the total.

[eddieho]

All boxes are entered properly, and box 12 goes to 1040 line 2a as mentioned above.  However it is being included on Line 9 and 15.  How do I fix this?  I doubt checked many times and yet still can't figure out why.

[baldietax]

when it comes to box 12 the only other thing I can think of is to confirm the state information is input, not sure if that would affect what you are describing.  Either go back thru the additional questions they ask after the DIV is input, or if you're on the desktop software use Forms mode to see all the details of the DIV (not sure equivalent on TT Online).

If still stuck suggest to call TT support directly and have them look at your return to see what is going on, or an expert in this forum may be able to look at it.

[VolvoGirl]

How do you know it is included in box 9?  My Vanguard DIV box 12 is only  on 1040 line 2a and NOT included on  2b or  3b and not on schedule B.  Try deleting that 1099 and enter it again Manually.  That usually fixes it especially if it imported wrong.