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State tax filing
Is the US Government Interest such as from a bond, e.g., a Series EE Savings Bond and it was reported by the financial institution as Dividends? This is not uncommon. If so, follow these steps to enter the information:
- Enter your Form 1099-DIV exactly as the boxes appear in the 1099-DIV section of the Federal return in TurboTax including exempt-interest dividends.
- Click Continue
- At the screen "Tell us if any of these uncommon situations apply to you", check the box next to "A portion of these dividends is U.S. Government interest". Click Continue.
- The next screen states "Enter U.S. Government Interest". Enter the amount in the box provided. Click Continue.
- The next screen asks which state(s) your exempt-interest dividends are from. You can enter the amount for each state here. Click Done.
The Learn More link in one of these steps explains:
The U.S. government taxes income you receive on its own bonds. Your state does NOT tax income from U.S. government bonds, but each state defines government bonds differently. You should check to see if any part of these dividends is taxable in your state. This information is usually included with the 1099 you received from your broker. You may also be able to get this information from your mutual fund company's website.
Based on this information, enter an adjustment for the amount your state does NOT tax, and the TurboTax State program will subtract this amount from your state.
Form 1099-DIV is used by banks and other financial institutions to report dividends and other distributions to taxpayers and to the IRS. See the Instructions for Form 1099-DIV for more information.
I am elevating this issue for review; however, as you noted, there was no tax consequence from reporting the interest as a dividend.
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