yz493,
Yes, that is correct. Multiply the total dividend by the fraction of US government interest. There are two "quirks" to be aware of. Some states only allow the deduction if at least 50% of the dividend is US government interest. Your 60% does qualify. Some states do not allow indirect federal government interest such as from
1. Asian Development Bank
2. Federal Home Loan Mortgage Corporation
3. Federal National Mortgage Association
4. Government National Mortgage Association
5. Inter-American Development Bank
6. International Bank for Reconstruction and Redevelopment (World Bank)
7. Repurchase agreements
8. Federal Agency Bonds
and some others
Your broker's or mutual fund's supplemental tax information will often split out the indirect US government interest. If not, just go with the percentage given. I really doubt the IRS will waste endless time trying to dissect out a couple of indirect dollars.
