Fidelity identifies in the prospectus that 37% of the money fund symbol FDRXX is directly from US Government bonds. The rest is Agency bonds such as Fannie Mae, FHLB and Ginnie Mae etc. and these ARE taxable or the % of the income from these agency bonds in most states are taxable. The problem I have is that the turbo tax program imports the entire amount as 1099-DIV's and subjects the entire amount to federal tax and state tax. The entire amount is subject to Federal tax but the 37% that is direct government bonds such as treasuries is not subject to state tax in many states. But somehow even though turbo tax asked how much of the fund is direct government interest they still pulled in the entire amount into my Massachusetts return and the state taxed the entire amount. What did I not click properly, or do I have to override the system? Thanks, please help...
