Why is my tax exempt interest and dividend being included as income

[candivaleri]

I just calculated my 2016 taxes and even though I have 17,320 in tax exempt interest and dividend it was used to calculate my total income. Why? This makes my income very high for Federal and State purposes.

[SteamTrain]

Total income on the review pages does not mean it is being included in "Taxable" income...

1)  Switch to Forms Mode and look at line 8b on your form 1040 to make sure it's in the correct place.

2)  If you are getting SS income too, the Tax-exempt $$ are included in your income for the purposes of determining what % of your SS is taxed. ....so entering Tax-exempt $$ (box 10 of a 1099-DIV or box 8 of a 1099-INT) can change your Refund or Balance due....but it is just that more of your SS is being taxed (not that you really care why).  Once 85% of your SS is being taxed, after that, more tax-exempt entries will no longer have an effect.