Tax exempt Income

[uvcatastrophe]

Until 2024, turbotax automatically  transferred my taxexempt income from my Federal Return to my State (Maryland) return.  However, in 2024 and 2025 it appears that I have to enter this information manually on my state return.  Is this correct?

Also, when I click on"learn more" regarding federally exempt taxes, I get the following information:

"Generally, foreign earned income that is excluded from your federal adjusted gross income should be added back to your Maryland income if Maryland is your permanent home."

My tax exempt income is from US municiple bonds, not foreign earned income.  Does income from US municipal bonds need to be added?

[Karis_F]

You will need to indicate in the entry area for each Form 1099-INT with tax-exempt interest (Box 😎 which state the interest is from. To enter this information, follow these instructions:

TurboTax Online

1. Go to Wages & Income>Investment and Savings> Interest (1099-INT)

2. After the 1099-INT entry, check off the question My state (ME, MD, MA, NH, NJ or WV) doesn't tax all of this interest (if applicable)

3. On the next screen, answer the question Which state is your tax exempt interest from?

TurboTax Desktop

1. Go to Personal Income>Interest and Dividends>Interest on 1099-INT

2. Follow Steps 2 & 3 above

Here is a TurboTax article with details on how to enter Form 1099-INT

[SteamTrain]

@uvcatastrophe 

And on the 1099-DIV, if you have tax-exempt  $$ in box 12, then must select "Multiple States" for the first "One State" bullet point  (it's the selection at the end of the drop-down list of states.)   The only deviation from this is if the bond fund you have only invests in MD bonds, so you could select MD in that case...but I don't know of any that do that.

This first bullet point must be selected as "Multiple States" even if you decide to use the second bullet point to break out MD bond $$ from the other state's bond $$.

[uvcatastrophe]

Thank you for your assistance. All of my tax-exempt interest was found on my 1099-DIV form in box 12, so regarding your step 1, the Interest on my 1099-INT is 0. 

Regarding your steps 2 and 3, I don't see the question "My state (ME,MD,MA,NH,NJ, or WV)  doesn't tax all of this interest".   Nor do I see the question Which state is your tax exempt interest from?

[uvcatastrophe]

Thanks for your assistance. I do have tax-exempt interest in box 12 of my 1099-DIV. However, there is no selection "Multiple States"  at the bottom of the drop-down list of states.

[SteamTrain · Accepted solution]

@uvcatastrophe 

{{{I edited out a couple questions I had?  and added the following]]]

_________________________

ANND, the "Multiple  States" selection I was talking about is on a page following the main form....not in the box 14, State Taxes &withholding area on the main form of the 1099-DIV itself.

[uvcatastrophe]

I finally managed to add my tax-exempt income by doing the following:

1. Select "Update" Interest and Dividends" (Federal Return)
2. Select Continue
3. Under "Uncommon Situations" Select "a portion of these dividends is US Govt. interest
4. Enter US Government Interest
5. Select Continue
6. Enter Foreign Dividends
7. Select Continue
8. "Tell us more about your exempt interest dividends"
9. Enter "Multiple States" from drop down list of states (last one)
10. Enter "Exempt interest dividend amount

The amount entered is transferred to the Maryland State return.

Thanks for all your help,

Richard Milstein