Not quite.... it is asking what state(s) issued the bonds that produced the tax exempt $$ in box 10 of that 1099-DIV form.
What you should do right now, is to go to the end of the drop down list and select "More than one state". That selection is always acceptable.
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Then, when you have time you can study the situation more. The main story is this... when you hold a bond fund that holds bonds for a mixture of states, you can sometimes get some tax advantage in your resident state by breaking out the $$ coming from your own state's bonds. The mutual fund company publishes lists of what % of their distribution came from each state, and you have to calculate the $$ amount yourself from that data.
Example: If I get a 1099-DIV with $1000 in box 10 and 2% of that $1000 came from bonds issued by my state. If I break out that $20 by indicating to my state that $20 came from my home state, then my state won't tax that $20....and since they tax at 5%, that saves me about $1 for my efforts....... but you have to figure out the exact $$ amount from your fund's data on your own. or don't bother and just select "More than one state"
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
