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To enter interest that is exempt from State ONLY:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Investment Income to expand, then click Interest income (Form 1099-INT).
  3. Click + Add Form 1099-INT to create a new copy of the form or click Edit to review a form already created.
  4. Click Quick Entry to scroll down to answer or review all applicable questions or click Step-by-Step Guidance to proceed with the interview questions.
  5. On the screen titled Interest Income - 1099-INT Income, enter your State Exempt interest as the 3. Interest on U.S. Savings Bonds and Treasury obligations amount, then click Continue.

The amount you enter in Box 3 will be added to the total interest income on the Federal return, but will not be included on the State return.

To enter interest that is exempt from Federal ONLY OR Federal AND State:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Investment Income to expand, then click Interest income (Form 1099-INT).
  3. Click + Add Form 1099-INT to create a new copy of the form or click Edit to review a form already created.
  4. Click Quick Entry to scroll down to answer or review all applicable questions or click Step-by-Step Guidance to proceed with the interview questions.
  5. On the screen titled Interest Income - Tax-Exempt Interest, enter the appropriate 8. Tax-exempt interest amount, then click Continue.
  6. If you have FEDERAL AND STATE EXEMPT interest, then click Yes on the screen titled Interest Income - State Tax-Exempt Interest, enter the Amount from box 8 that is both federal and state exempt interest that is also state-exempt, then click Continue.

Example for Federal and State exempt

You have $2,000 dollars of total interest, with $1,000 federally exempt and $300 state exempt. Enter $1000 in Box 1 of Form 1099-INT Interest Income. The $1000 that is federally exempt would be entered in Box 8. The $300 that is exempt from state taxes would be entered in the field Amount from Box 8 that is both Federal and State exempt interest.

In this example, the following interest income would be reported on the Federal and State returns:

Form 1040, Line 2a = $1,000
Form 1040, Line 2b = $1,000
State return (line numbers differ) = $1,700

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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