My 1099-INT form has included the US Agency bond interest which is state tax exempt. It did break out the Treasury Bond interest but how can I indicate the Agency bond interest so I don't have to pay state tax on that interest? Can I adjust the line item for "Interest on US Savings Bonds and Treasury Obligations" to include the Agency bond interest?
For Pennsylvania, I can go directly to "Interest Income Worksheet", there is a column called "Adjustment Amount", I can simply enter the total of Agency Bond payment, then, for the "Adjust Type", I use "M" - which says "State Use Only". This is the part I am not sure, The other choice includes "H" - which means Other Adjustment. However, choosing "H" does not give me the full deduction of the agency bond payment (only gives me, like, 90%).
Can someone help?
Use 'M'. You are creating an entry for state use only. That's the proper use of that code.