So Ive never had to deal with this in prior years, but this year on my 1099 DIV. Box 12 I have 850.00 in exempt interest dividends. Im under the impression these do not get federally taxed but heres whats weird.
Initially when I entered the 1099 DIV I missed box 12. At that point my fed return was about $300. When I realized I didnt enter box 12 on my 1099 DIV, I returned to the income section and in the 1099 DIV I added in the $850 exempt interest dividends, but now I OWE $237 federal taxes.
Whats even more strange is if I eliminated all of my business deductions, my federal retun would then go to 0 instead of owing $237.
Any idea why these exempt divs are affecting the federal return negatively?
Thanks
