@orwellflash
When dividends of any type, show up in box 1a of a 1099-DIV form (As they normally do from an ETF), even of they are 100% from US Obligations, the software doesn't know it right off the bat, because other non-US bond $$ and stock dividends feed into box 1a too. The "Supplemental" information provided on the extra sheets from Vanguard (and other brokerages) about what amounts were from US Bond obligations, does not get into anybody's tax software anywhere. (Maybe someday the brokerages and tax software companies will figure out how to format it, but I suspect it will not be any time soon)
Only $$ showing in box 3 of a 1099-INT will automatically transfer to the state software as being state exempt on the state forms.
INSTEAD....For any 1099-DIV form, where US obligation dividends are part of the box 1a $$ of a 1099-DIV, you need to calculate exactly what the sub-amount of US Bond $$ is being represented in box 1a......then, on the page AFTER the main 1099-DIV form, the is a checkbox question you check for "A portion of these dividends is US Government interest"....and then you "Continue " to the next page where you can enter the exact US Govt $$ amount. THEN that $$ amount is transferred to the state forms (along with any 1099-INT box 3 $$).
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
