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That refers to the box 11 $$ amount......and which states issued the exempt interest/dividends.   You do NOT select your own state for all of it, unless you invested only in a fund that exclusively purchased your own resident state's municipal bonds

 

For small amounts, just go to the end of the state list and select "Multiple States"  (desktop software uses the term "More than one state").

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IF the amount in box 11 is great, you can, but do not have to, break out your home resident state's own Muni interest from the other states….BUT...you would have to calculate the exact $$ amount yourself from each Muni Bond Fund's breakdown of the % of their distribution that came from your own state. 

 

IF you've never done it before, it's a good exercise to see what might happen if you did break out your own state's Muni interest.  As an example:  Say you had $1000 in box 11, and the Mutual Fund company indicates that 2% came from your state's bonds.  So that's $20 of interest that your state won't tax.....so you save yourself a whopping $1 in state taxes (if at a state 5% tax rate).   That's what I meant about box 11 needs to be significant before it has a significant effect in many cases.  But there are some Bond funds that might have significant  investments in your state's bonds...depends on what state you live in.

 

Of course a couple states have limits as to whether you can do this at all.  IL doesn't allow their residents to do the breakout from Bond funds at all.  CA and MN only allow their residents to do the breakdown if the particular fund had more than 50% of that state's muni bonds.

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IF you do decide to do a breakout of your own state's interest, the following pictures show how...but remember that you have to calculate the exact $$ amount yourself:

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MunitExempt_1.png

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MunitExempt_2.png

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____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

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