Delaware taxation of territory (e.g. PR, VI) muni interest

Three possibilities come to mind...

PR municipal interest is tax-exempt in DE - you made a data input error PR municipal interest is tax-exempt in DE - there is a bug in TT what you have doesn't qualify as PR municipal interest for some obscure reason - TT is correct

I would bet on the first choice.

Ira Smilovitz, EA

Thanks Ira for confirming that PR muni interest is (generally) tax-exempt in DE.

The problem is not human error (at least on my end). I created a test case with a single 1099INT, $40K in box 1 - ordinary interest (so that there would be some tax owed regardless of anything else), and $30K in box 8 (exempt interest). The dialog asked me to name a "state" for the exempt interest, and I said Puerto Rico.

If I use a NY address and prepare a NY return, the $30K is not added to NY income (on NY form IT-201, line 20). But if I change income source to Oregon, it is added. So my data entry is correct.

If I use a DE address and prepare a DE return, the $30K of PR interest is added to DE income (on line 30 as already described).

Side note: I discovered that NY and DE treat ABP (box 13) differently. TT for NY is correct (sadly NY does not allow one to apply ABP to interest from out-of-state premium munis if one doesn't itemize). I'm still checking on DE (TT prorates across all bonds reported in a single

In that case, you'll have to take it up with TT support. When I mentioned human error, I was thinking there might be a special checkbox or something to indicate that the muni interest was from a US territory and not just a different state. I haven't used TT in more than a decade so I don't know the specifics of data entry.

Ira Smilovitz, EA