Where do I enter statement showing interest income from IRS

You enter the interest in TurboTax the same as a 1099-INT from a bank. For the payer's name enter Internal Revenue Service, and enter the amount of interest in box 1. That's all you have to enter.

To enter it, type 1099-int in the Search box, then click the link that says "Jump to 1099-int."

Your daughter should enter her interest on her own tax return, the same way.

yes, that's the reason. the interest is reported on line 1 of the 1099-INT. it is not US interest exempt from state taxes if you live in a state with income taxes.