Should the program be able to tax nontaxable distributions on the state return, when they are not taxed on the federal return?

[kimpieper]

Client  (s) had nontaxable dividends on 1099's that should not be taxable on federal, but should be taxed on state return, and program did not do that?  Should it not automatically do that?

[IRonMaN · Accepted solution]

It should do it automatically, but it has to know about it before it can do it.  On the dividend worksheet, you can double click on the line for dividends to open up another page that contains nontaxable information.  Personally, I'm lazy and just enter the amounts as tax exempt interest and use the state code of XX to make them taxable to the state.