Virginia Exempt US Bond Income not filled in based on federal interview

[dannott104]

During the Federal Interview I filled out the portion of 1099 dividends that were from US Government Obligations. Now in the Virginia state tax interview, Investments Section, Exempt US Bond Income, it is asking for a manual entry. 

1) Why doesn't TurboTax use the entries I already provided during the federal interview to auto calculate this?

2) Assuming there is some nuance, where do I look in my federal forms to summarize the information I already calculated during the federal interview.

This is for the 2025 tax year and I am using the Windows desktop version of TurboTax Deluxe 

[baldietax · Accepted solution]

You should not have to enter anything.  "Exempt US Bond Income" is different - it's for US Obligations exempt from Federal Tax (not munis; I don't think this is very common).

Go to Forms mode and check your Form 760 Line 7 Subtractions and it should total all the sources you have for US Gov Obligations.

There is no one place on your Federal forms to see this amount you have to take the total of any 1099-INT Box 3 less premium or accrued interest adjustments, 1099-OID Box 8 less premium/adjustments, 1099-DIV US Gov $ etc).  I track this offline in a spreadsheet to tie out the VA subtractions for this, and additions for munis taxed in VA.

[newusernameagain]

@baldietax 

In your statement "You should not have to enter anything.  "Exempt US Bond Income" is different - it's for US Obligations exempt from Federal Tax (not munis; I don't think this is very common)."

Why do you say "not munis"? Municipal Bonds are usually exempt from Federal and state Tax.

Are you saying the entry for VA is only asking for income exempt at the federal level but NOT at the state level?

[baldietax]

I mean this category should not be needed for munis either, which will be automatically reflected on 760 Line 2 as an addition to income if taxed in VA, based on how the state-specific questions after the 1099 input are answered.

Outside of Munis I suppose it would be an uncommon situation like "Indian tribal government bonds" (see Publication 550).

Either way - this entry will add to VA tax on Line 2 rather than subtract on Line 7.