I'm being asked what state my exempt interest dividends are coming from for a 1099-DIV, but I don't know how to answer the question -- is it my state of residence?

[SteamTrain · Accepted solution]

No....when in error check mode, Put in "XX"

...Just Enter an "XX" to get thru the error.

 then go study the situation.  The "XX" just means "More than one state"

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Example for a person living in NC:

When you get a 1099-DIV with $$ in box 10, you need to edit that form to indicate what states issued the Bonds that produced those $$.  On a 1099-DIV, that is usually "More than one state" because whatever Mutual fund holdings you have will also hold bonds from a whole bunch of states  

There are exceptions of course:  IF the bond fund you hold had some NC bonds in it, you can break-out that sub-part and not get taxed on the NC-only bonds, but usually, it's not worth the effort unless Box 10 is really large.

Example:  On a 1099-DIV, Box 10 = $1000.  You review your brokerage information, and they say that 2% came from NC-Issued bonds.  so that's $20.   NC taxes at ~5%, so if you break out that NC-only amount, you will save $20x0.05=$1 of NC taxes.

The same calculation applies to any box 8 $$ on a 1099-INT form.

But usually, "More than one state" is easiest until the amounts get to be worthwhile for you to do the extra work.

[eurotransient]

Thank you so much! I didn't even notice the "more than one state" option there. Much appreciated.