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I am doing 2006 w/TT.

Issue #1: I received a 1099-INT from USAA TAX EXEMPT INTERMEDIATE-TERM FUND w/$782.83 in Block 8, Tax-exempt interest.
I entered this info while doing Schedule B.

Exactly how did you enter it?

TT asked me what state this interest originated and I entered Texas, since USAA is located in San Antonio, TX. Is this correct?

No. You've already received information about how to determine what portion, if any, of the payments are exempt from state tax.

While reviewing my 1040, it reflects $1,566 on Line 8b. I am totally confused why the entry is not $783. Why is it double?

While reviewing my VA State return, it reflects $1,566 on Line 1,Interest on obligations of another state, under Part 1 Additions. I am likewise confused why it is double.

The second question is easy. It's double on the state return because it's double on the Federal. Fix it on the Federal, and the state will correct itself.

It looks like you've entered the information twice. Go into forms mode and find all 1099-INT's associated with the return. If there's a duplicate, delete it, and that should fix the doubling problem. If there isn't a duplicate 1099, report back.

Issue #2: I received 1099-INT from Legacy Treasury w/$431 in Block 3, Interest on US Savings Bonds and Treasury obligations. I entered data while doing Schedule B.(IT DOES APPEAR ON SCHEDULE B,as expected, since it is taxable). While reviewing the state return, it reflects $431 on Line 2b, Part 1, Additions. I do not believe this is accurate since the interest is exempt from state taxes. Under Part 1, Subtractions,it reflects $431 on Line 4, Income.

This sounds like a software bug. Make sure you've downloaded any software updates. If it doesn't fix itself, report it to TT.

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