Updating only State return for Dividends on US Govt Treasuries leads to Federal tax payable

Forum|Forum|2 months ago
April 12, 2026
1 reply
51 views

Hi,

I did not know that i have to specifically enter my Dividends from ETFs like SGOV which earn most of their income from US Govt Treasuries. I therefore need to amend my return since i filed already.

In Turbo tax, I went to Dividends section and when it asked about earning US Govt interest, i entered the amount and saved. It gave me a refund on my state tax but then it also created a tax payable on my Federal return. I looked at the Forms and for some reason it decreased my Total income on the form 1040 (by an amount larger than the Dividend I claimed as State exempt) but made me liable to extra tax. I did not understand why. Any idea how I can remove this extra Federal tax (and make it zero) and file just for State amendment?

thanks

maglib

Level 11

@goyal_raj I'm not sure how you entered it into the amended return.

When you did the amended return did you go back to where you originally entered the dividend and just update the dividend already entered and check under Do These Uncommon Situations apply? Check to A portion of these dividends is US Government interest? Then enter amount considered US Govt. interest? That is all you would need to do as TT knows that they are state tax free. You would not be doing anything else other than editing what you had already input. Indicating an amount as state tax free may be your error.

Then did you enter the amount you already paid/received to the federal government on the amended return during the interview?

Let me know

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goyal_rajAuthor

Level 5

Thanks.

All I did was (before clicking on Amend a return, which I should have done first) to go tot he Dividends sections, did not enter number there, just clicked Confirm, that took me to a page where it asked me if there was any part which is US Govt Interest; I said yes to which it asked to enter the amount of Dividend which was part of US Govt Treasuries, which I did. That resulted in a state tax refund but a Federal payment.

maglib

Level 11

Did at any point during any fed or state interview indicate a state tax free amount vs just reporting correctly as UST interest? Check the Schedule B and see if double counted. The interest should originally be shown as federal and state taxed, then changing to selecting UST interest amount should have no impact federally. I am thinking you chose state tax free somewhere.