topic Correct way to calculate US Govt securities income deduction for State taxes? in Get your taxes done using TurboTax

Correct way to calculate US Govt securities income deduction for State taxes?

128TCD — Mon, 23 Feb 2026 13:11:21 GMT

I have a mutual fund holding ~99% US treasuries and ~1% Fed Home Loan securities that paid dividends and a very small short-term capital gain from the fund's internal sales (not my sales). I have two questions on how to enter/adjust data to deduct the proper amount of Govt income for my state taxes:

1. Do I include both the US Treasury and the Fed Home Loan percentage listed on my broker's 1099 detail page in my calculation of Govt income exempt from state taxes?

2. Do I include only the "nonqualified dividend" income listed on my broker's supplemental information page, or do I also include the short-term capital gain listed with the dividends, in the calculation for state-tax exempt income? Both items are included on the broker's "Detail for Dividends and Distributions" for that fund.

Thank you.

Re: Correct way to calculate US Govt securities income deduction for State taxes?

JulieS — Tue, 07 Feb 2023 18:23:11 GMT

Please clarify your question, what state are you filing?

Re: Correct way to calculate US Govt securities income deduction for State taxes?

128TCD — Tue, 07 Feb 2023 19:07:27 GMT

This is for California tax purposes. Thanks.

Re: Correct way to calculate US Govt securities income deduction for State taxes?

JulieS — Tue, 07 Feb 2023 19:42:57 GMT

No, don't include the Federal Home Loan percentage when you calculate the portion exempt from state tax. California does not consider them U.S.
obligations for California tax purposes.

Include only the "nonqualified dividend" income listed on your broker's supplemental information page and not the capital gain, because California does not extend this rule to gains and losses.