Search Help Topics:

Follow the steps below to report exempt interest. If you need help accessing Form 1099-INT, go to our Form 1099-INT - Entering in Program FAQ.

To enter interest that is exempt from State only:

  1. From within your Form 1099-INT, continue with the interview process until you reach the screen titled Interest Income - 1099-INT Income.
  2. Click the data entry field below 3. Interest on U.S. Savings Bonds and Treasury obligations, and type the state exempt amount (the amount you enter here will be added to the total interest income on the Federal return, but not the State return).
  3. On the screen titled Interest Income - State Tax-Exempt Interest, click No (this screen is for interest that is both state and federal exempt).

To enter interest that is exempt from Federal only:

  1. From within your Form 1099-INT, continue with the interview process until you reach the screen titled Interest Income - Tax-Exempt Interest.
  2. Click the data entry field below 8. Tax-exempt interest, and type the federal exempt amount.
  3. On the screen titled Interest Income - State Tax-Exempt Interest, click No (this screen is for interest that is both state and federal exempt).

To enter interest that is exempt from both Federal and State:

  1. From within your Form 1099-INT, continue with the interview process until you reach the screen titled Interest Income - Tax-Exempt Interest.
  2. Click the data entry field below 8. Tax-exempt interest, and type the federal exempt amount.
  3. On the screen titled Interest Income - State Tax-Exempt Interest, click Yes.

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 webpage or document at the time it is accessed.


Was this helpful to you?