Should 2023 Treasury interest be added to my state taxes as1985 or 1986 OID ?

[ffreyguy]

I bought a Treasury Strip; federal taxes on imputed interest must be paid every year, but there should be no state tax.  But this year, TurboTax adds it to my state tax as 1985 or 1986 OID.  Is this correct ?

[Mike9241]

is it on line 2 of the 1099-OID and did you indicate it was US interest? many states start with federal adjusted gross income so it's included to start but later subtracted out. 

if your state does not start with federal agi, tell us what state and what form and line the amount is appearing on. 

[ffreyguy]

Hello Mike9241,

Thanks for your response.

The 1099-OID form shows it on line 8, OID on US Treasury obligations and that is how I enter it on TurboTax.  I live in California and there is a form called CA(540), California Adjustments.  On that form, this OID plus some other Treasury interest are subtracted from the federal income, as is Social Security, which is not taxed by California.  But under a section titled "Additional Income from federal Schedule 1", it adds it back on to my state income.  This is not on Schedule 1 - it is

all zeros.  

It didn't do this on my 2022 taxes (2022 was the first year I had this).  Could this be a glitch in TurboTax ?

[ffreyguy]

Sorry - I forgot - on form CA(54), it is add back on Part I, Section B, line 8 z.