Turbotax continues to combine interest from Treasury Bond with interest from ordinary savings account on my Maryland State taxes.

[kathasmi]

I was told this was because Maryland had not submitted some update to Turbotax, but they were supposed to do it by Jan 29. It is still not working. Anyone else stymied by this?

[baldietax]

are you referring to treasury interest in Box 3 on a 1099-INT being included in your state taxes; or is this accrued market discount on a treasury note reported on a 1099-B?

[kathasmi]

Yes, referring to treasury interest in box 3 of 1099-INT. In Maryland, treasury bond interest is tax deductible, but Turbotax is lumping together the tax deductible treasury bond interest with taxable interest from another 1099 on the state reporting form. No way to disentangle them.

[RachelW33]

In order to include your Treasury Bond interest as a subtraction on your Maryland tax return, please follow these steps: 

1. Sign into your return and choose edit next to your 1099-INT 
2. Confirm your input for the 1099-INT is correct and click Continue
3. When you get to the question Do any of these uncommon situations apply? choose the box My state (ME, MD, MA, NH, NJ or WV) doesn't tax all of this interest.
4. From the drop down box, choose Maryland Nontaxable Interest, taxable to Federal
5. Click Continue

Your Treasury Bond interest will be shown as a subtraction on MD Form 502SU, Line ab.

[kathasmi]

Thanks, Rachel. This is how I'd gone about it, but what happens is that the taxable interest from the ordinary savings account is for some reason being combined with the nontaxable T bond interest on the 502 SU. In other words, rather than just the T bond interest being ported over to the 502 SU, Turbotax is bringing the taxable and nontaxable INT 1099s onto the 502 SU, so both are being treated as tax deductible, and there seems to be no way to fix it.

[RachelW33]

I would like to take a deeper look at this. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

TurboTax Online:

1. Sign into your online account.
2. Locate the Tax Tools on the left-hand side of the screen.
3. A drop-down will appear. Select Tools
4. On the pop-up screen, click on “Share my file with agent.”
5. This will generate a message that a diagnostic file gets sanitized and transmitted to us.
6. Please provide the Token Number that was generated in the response.

TurboTax Desktop/Download Versions:

1. Open your return.
2. Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent” *
3. This will generate a message that a diagnostic copy will be created.  Click on OK and the tax file will be sanitized and transmitted to us.
4. Please provide the Token Number (including the dash) that was generated in the response.

*(If using a MAC, go to the menu at the top of the screen, select Help, then, “Send Tax File to Agent”)

 @kathasmi 

[mithomp]

I am having the exact same issue.  Turbotax combined interest earned from money market/CD with interest from treasury bond interest and gave me an erroneous subtraction to income.  Also, I cannot manually change the Maryland Form 502SU.    MT.

[SteamTrain]

@dmertz  Might be able to check out what's happening here too.  I think he uses MD forms.

[dmertz]

I don't think that I'm seeing that behavior.

If there is a Form 1099-INT with amounts in both box 1 and box 3, you might try splitting the form into two, one for each box.

Otherwise, perhaps delete all Forms 1099-INT and reenter.

[kathasmi]

In my case, there are two separate 1099-INTs. One (savings account) has an amount in box 1. The second (Tbond) has an amount only in box 3. So they are already 2 separate documents. 

[kathasmi]

Thanks, Rachel, I did do screen sharing live with a tax expert at Turbotax. All was correctly entered, but she was stumped as to why the two were being combined when sent to the MD tax return. Is sending you a copy different from this live approach? 

[dmertz]

The only way that I've been able to cause TurboTax to treat a box-1 amount as a subtraction from income on a Maryland tax return is to indicate when entering the particular Form 1099-INT into TurboTax that Maryland does not tax all of this income.  It seems that it should be possible to rectify this by deleting and reentering the Form 1099-INT that has the interest shown in box 1 and not box 3.

Still, it's possible that some amount got entered directly on the related worksheet on MD Form 502SU.  It seems that this amount can be eliminated either by simply deleting the Form 502SU and allowing it to regenerate, or by editing the Form 1099-INT, marking the box-1 amount as not taxable to MD, then editing again to remove that indication.  I would try the latter first since deleting the Form 502SU might necessitate going back and reentering other subtractions from income that might not regenerate.

[Hank01]

on form 502SU line ab and line B Capital Gains for us Turbo tax entered all my CG from federal return. None of these CG were from US obligations. Turbo tax has a problem.

[dmertz]

The only way I've found to get an amount to appear on line B of TurboTax's Form 502SU Income from U.S. Obligations Smart Worksheet is to enter it manually on this line.  It does not propagate from anywhere else that I can find, nowhere from any entries made in the Federal Taxes section in TurboTax.  It seems to be a value entered directly by the user on the Capital Gains From U.S. Obligations are Tax Free page in the Maryland State section.  If the value there should be zero, you should be able to simply delete the value.