Tax exempt interest - Federal only, not state?

If the tax exmpt interest is only for Federal, not for any states. However, in schedule B (1099-int), box 8 asks for State ID, can I just leave it blank? But Turbo tax software dedects this as an error. Please advise. Thanks

6 Answers

  • 1 decade ago
    Favorite Answer

    For turbotax online, enter "XX" as the state code. This worked for me.

  • 1 decade ago

    You should not leave that field blank.

    The help instructions for that page say to enter the 2-letter postal abbreviation of the state in which the interest was earned. The information is needed because some states tax municipal bond interest from another state.

    "When all else fails, follow the instructions."

  • 1 decade ago

    I'm having the exact same problem.

    This is how I fixed it:

    -Click the Federal Taxes Tab. Go to Income.

    -Next screen is “Choose How to Enter Your Information”. Click Specific Topics.

    -Next screen is “Your Income”. Click the Revisit button next to Interest and Dividends.

    -Next screen is “Interest Income Summary”. Click Edit.

    -Next screen is “Report Interest Income”. Click Continue.

    -Next screen is “Do Any of These Apply?” Don’t check anything. Click Continue.

    -Next screen should say “Interest From Which State?”. In my case, it also said “You entered your COMPANY/FUND NAME interest as exempt from federal tax. Select the state where this interest originated.” Click on the drop-down box and you should find “More Than One State” at the bottom of the list.

    There’s also some financial gymnastics you have to do detailed in “Follow special procedures if you have municipal bond interest from more than one state. Explain This”. I said screw it, I just wanted to get rid of the error.

    -Click Continue.

    That should fix it.

    Click on the Federal Review Tab and go to Error Check to see if it worked.

  • 1 decade ago

    If you are using software, you must follow all the directions and instructions, and if you think it is wrong, then you should contact the makers of the software.

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  • 4 years ago

    Wow, thank you! I was asking myself the same thing today

  • 4 years ago

    Maybe it's good

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