State tax filing
In order to deduct interest from federal agency bonds in the Oregon tax return, you must declare that a portion of dividends you received is "interest on U.S. government obligations". That declaration is made when you are in the federal taxes section of the interview, and it's easy to miss:
- Click the "Show Topic List" button at the top of the screen
- In section "2. Federal Taxes", in the "Interest and Dividend Income" section, find the dividend that you need to declare. (For my taxes, it was "Form 1099-DIV (VANGUARD MARKETING CORP)"). Click on that dividend
- You should be in a page titled "Let's get the details from your 1099-DIV or brokerage statement". Click the button at the bottom right to continue to the next page
- Keep clicking to the next page until you reach titled "Tell us if any of these uncommon situations apply to you". In that page, check the checkbox titled "A portion of these dividends is U.S. Government interest"
Once you do that, you will find that the values has also been added to your OR-ASC form as a subtraction.
Repeat the process above for any ordinary (non-qualified) dividends. For Vanguard, these are listed in the "Detail for Dividends and Distributions" as "Nonqualified dividend" and/or "Section 199A dividend".
