Non-Arizona municipal interest

Forum|Forum|6 years ago
April 9, 2020
10 replies
90 views

When entering municipal bond interest on the Federal form, I specified the amounts from my resident state of Arizona and other states from each 1099. After subtracting the private activity bond interest, the amount of non-Arizona municipal interest shown on line 13 of the Arizona form is very close (although not exactly) what I calculated it should be. However, the amounts shown on the Schedule of Non-Arizona Municipal Interest are nowhere close to the correct values, and the page cannot be edited. When I went to the "forms" view, the page also could not be edited (it is confusingly labeled as Form 140 line B6). Should I care?

Best answer by Hal_Al

One other thing: states are not allowed to tax the interest of bonds from US territories. So, Puerto Rico, Guam, USVI etc. could be the source of the difference (particularly "line 13 of the Arizona form is very close (although not exactly)").

Hal_Al

Level 15

Should I care?

Probably not. I say that as somebody not specifically familiar with the AZ forms. But, the general rule is: Your state will tax all the dividends except the dividends from municipal bonds from your state.

In TurboTax, when asked which state, check the box "I earned tax exempt dividends in more than one state". In the drop down menu, select your state and enter the $ amount you calculated. In the 2nd box, select "More than one state" (at the bottom of the scroll down list) and enter the remaining dollar amount (do not go to the effort of entering the individual other states...that's probably the source of the error.).

Hal_Al

Answer

Level 15

charfmanAuthor

Level 2

Well, I did not know that. When I subtract the non-Arizona municipal interest listed on the 1099-DIV from U.S. Possessions, I get much closer to the amount that TurboTax migrated from the Federal to the State return. But I don't know how TurboTax would have known this percentage, since I entered the data on the Federal return as "Arizona" and "More than one state". But thank you for informing me of that new bit of information.