Federal Tax exempt-interest dividends

[mdames]

I am filing an amended return via Turbo Tax. I have entered an amount from box 12 from a 1099-DIV (exempt-interest dividends). Turbo Tax is counting this as income that is taxable by the IRS. It is telling me I owe taxes on the amount listed in Box 12. However, tax exempt dividends are not taxable by the IRS. So, TT is incorrect. How can I get this fixed with TT?  Thanks

[DianeW777]

If you would like to send us a “diagnostic” file that has your “numbers” but not your personal information it would help.  If you would like to do this, here are the instructions:  (Don't forget to give us the state)

TurboTax Online:

Open your return -Go to the menu panel on the left side of your return and select Tax Tools. 

1. Then select Tools below Tax Tools.
2. A window will pop up which says Tools Center.  
3. On this screen, select Share my file with Agent.
4. You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number.
5. Reply to this thread with your Token number and your state. This will allow us to open a copy of your return without seeing any personal information.

TurboTax Desktop:

If you like, you can send a copy of your return that will be scrubbed to eliminate your personal data by using these steps:

1. Click on Online in the top left menu of TurboTax Desktop for Windows
2. Select 'Send Tax File to Agent'* > Follow the prompts to reach the token number.
   • Enter your email used for TurboTax > Enter your code > Send
3. Write down or send an image of your token number and state then place in this issue.
4. We can then review your exact scenario for a solution.
5. Please also tell us any states included in the return. This is necessary for us to view the return.
   • *If using a MAC, go to the menu at the top of the screen, select Help, then, 'Send Tax File to Agent')

We will be able to see exactly what you are seeing and we can determine what exactly is going on in your return to provide you with a resolution.

[mdames]

Thank you Dianne. my token number is 1337067

[mdames]

My token number is 1337067. I am in the state of Idaho. Thank you  

[mdames]

I want to make sure that I have clearly communicated that this problem is on my uncompleted amended return, not on my original return that has been filed.

[mdames]

Hi Diane. I have provided you with the information you requested.  Thanks

[DianeW777]

You can be assured the tax exempt interest dividends are not being taxed on your amended return.

The token has been received. When I look at your return the tax exempt interest dividends are being reported on the 1040, Line 2a and the taxable interest is on line 2b. Only the taxable dividends are reported on the 1040, Lines 3a and 3b.

The tax exempt interest dividends are included to determine the amount of taxable social security benefits which is correct. 

In the Step-by-Step, when going through the 1099-DIV,  I did select Idaho for the state on the page titled: 'Tell us more about your exempt-interest dividends'. Be sure to answer that question accurately as it pertains to you.

I'm not exactly sure what the reason is for your amended return due to privacy. There is no information available on the explanation page.

@mdames 

[mdames]

Thank you. But if I am not being taxed on my amended return for the tax exempt interest dividends, why do I have a tax liability on my amended return? When I remove the amount I input (into TurboTax) into box 12 from my 1099-DIV form (tax exempt interest dividends) the tax liability decreases significantly. When I put it back into TT in box 12, the tax increases again. So, it certainly appears that I am being taxed for the amount of my tax exempt interest dividends. I had to amend my return because I accidentally failed to enter income from a 1099-DIV and 1099-B I received. I know that there should be a slight increase in my Federal Taxes due to a small amount of short term capital gains. But this is not the problem. Most of the taxes that TT says are due on my amended return are due to the amount of tax exempt interest dividends I entered. I just don't understand this.