Why is 1099-Int Box 3 refund amount drastically different than if in Box 1?

[Winlife]

If I enter my Treasury Notes $8400 interest in box 3 from my 1099-R, I get back $1600 LESS than entering the SAME amount in Box 1 instead (let's ignore the whole state tax stuff).  Is treasury interest taxed at a much higher rate or something on short term Treasury notes? I am totally baffled what is going on and searching on the internet has produced no answers. I wondered if TurboTax had an error or something? Or is there a reason other than the state taxation that Box 3 was created? Note: I always held them to maturity, but bought 3-12 month "bonds".

[JulieS]

Yes, bond interest may be taxed at a higher rate than retirement income, if you are  subject to  the Net Investment Tax. Bond interest is investment income and 1099-R income is not. 

You are subject the Net Investment Tax if your income exceeds:

• Married filing jointly - $250,000
• Married Filing Separately - $125,000
• Single or Head of Household - $200,000
• Qualifying Widow with child - $250,000

If your income is more modest than that, investment income more then $11,000 will disqualify you for Earned Income Credit. 

[VolvoGirl]

That should not make a difference for federal.  When you tried it in box 1 did you delete it from box 3 (and visa versa)?  The only way to tell what changed is to look at the return before you entered the interest and then after entering it in box 1 and again after entering it in box 3.  Compare all the 1040 lines.  

Are you using the Online version?   Before filing you can preview the 1040 or print the whole return. You have to pay any fees first before you can see all the forms, etc.
https://ttlc.intuit.com/community/accessing/help/how-do-i-preview-my-turbotax-online-return-before-f...