Capital gains from US Obligations - MD tax form

[KWR1]

I have capital gains from US obligations (as identified in the supplemental information on my 1099-div), and I do not see where they are to be entered in turbotax ( Desktop Premier on a Mac) for my Maryland return. As I understand it, they should not be taxed by Maryland.

I also have dividends from US Obligations which were entered with the Federal return to be used on the state return.  When I open MD 502SU, I see an "Income form US Obligations Smart Worksheet" with lines A, B and C.

Line A correctly contains the amount of dividends from US obligations.

Line B which is supposed to be "Capital gains from the sale or exchange of US govt obligations"  doesn't have anything in it.  

I have gone back through the federal and state form questions, and I am not seeing where I should be entering this information. (Other than either entering it along with the dividends)

Where is this information supposed to be entered?

Thanks.

[AmyC]

I think you are saying that all of your capital gains came from a fund.  Since the capital gains came from a fund, those are part of the dividends and not a separate sale.

You did not sell any bonds that you own personally. You don't have a sch D with sale of obligations so you don't have capital gains separately. You would not have an entry for the capital gains line since it is included with the fund information - already a part of the DIV.

[KWR1]

Actually,. I have a fund I'll call ABCDE. Rounding numbers, ABCDE paid dividends of $500.00. ABCDE also had a capital gains distribution of $400.00. This $400.00 is not a part of the dividends. My understanding is that MD does not tax either the dividends or the capital gains that were from US obligations.

Since 5.4% of the fund is US obligations, my understanding is that I take 5.4% of the dividends of $500 as a subtraction on the MD tax form, and that I can also take 5.4% of the capital gains of $400.00 as a subtraction on the MD tax form. I was asked in turbotax about the dividends, but I was not asked separately about the capital gains. 

So, I am not sure if my understanding is wrong or if I missed the place that I should be entering the capital gains information.

[DMarkM1]

MD does exclude the capital gains on US obligations.  

1. After entering a form 1099-DIV with amounts in boxes 1A and 2A
2. You will find a follow on page to indicate that some/all of the dividends are from US obligations  
3. Check the box  
4. You will be asked what amount of the dividends in box 1A are from US obligations  
5. Enter your calculated number, 5.4% of box 1A, for example  
6. Continue to the MD state interview  
7. "Edit" the "Income" section  
8. You will see the "Interest from US obligations" topic  
9. Edit that topic  
10. You will arrive at a page asking about the capital gains on US obligations.  
11. You can enter your calculated number, again 5.4% of box 2a, for example

[KWR1]

I have done steps 1-7 . When I continue to MD state interview (step 6) and "Edit" the "Income" section (step 7), I do not see an "Interest from US Obligations" topic.

I do get a page that is titled

   "Here's the income that Maryland handles differently"

And under this are various topics which include the topic "Investments" and  the topic "Miscellaneous"

I have checked each topic under Investments, in case the US Obligations section was not obvious. The topics under Investments are "Build America Bonds subtraction", "Gains on Sales of Maryland Bonds", and "Depletion Adjustment."   The list of topics under Miscellaneous is much longer, but non seem related to this issue.

[AmyC]

Something is not right in your program.   Please follow the steps below:

Desktop version: 

1. Delete the form
2. Save your return while closing the program.
3. Update the program
4. Open
5. Enter the information again.

Online version:

A full or corrupted cache can cause problems in TurboTax, so sometimes you need to clear your cache (that is, remove these temporary files).

For stuck information follow these steps:

1. Delete the form/ worksheet- if possible, see How to Delete  
2. Log out of your return and try one or more of the following:
   • Don't use Internet Explorer.
   • Clear cache and cookies,
   • Sign in using a different browser.
   • Sign in using a different device.
3. Log back into your return.
   • Enter the information again.

[KWR1]

I am on a Mac using the desktop premier version of turbotax. Following your list of steps -

1. Delete the form - Under File, I chose "Remove Maryland Data" and verified that all MD specific information was gone.

2. Save your return while closing the program - Under File, I chose "Save" and then quit  turbotax

3.Update the program - I got back into turbotax, and it had updates which I had it do.

4.Open - I opened turbotax

5.Enter the information again -I followed through the interview again and when I got to the "Here's the Income that Maryland handles differently" there are still only 3 options under investments as noted before. There is no "Income from US Obligations."

[AmyC]

Save your .data file. You need to contact support. My inclination is that your program needs to be removed and reinstalled but maybe there is another option or a fresh download. Contact support and let them see the issue.

[KWR1]

I really preferred not allowing support  to have access to my computer, and they don't seem to be able to handle it any other way.  (Twice someone was working on it, and twice the phone line was dropped.) So if anyone else has this problem, I did go into the MD Form 502SU and in the Income from US Obligations Smart Worksheet, I manually entered the capital gains on line B. The software correctly added this to my existing amount on line A and put it into line ab of the 502SU form. And there was a subsequent drop in MD tax after I went all the way back through the MD form - so adding the amount into the 502SU form did not trigger the recalculation of the tax on its own, but following through the interview again did.

[Potomac Marylander]

The 5.4% in this example is % of DIVIDENDS from U.S. Government Securities.  On what basis are we assuming that the percentage is the same for CAPITAL GAINS from USG securities?  This is where TurboTax is causing this confusion.  

[Potomac Marylander]

The 5.4% in this example is % of DIVIDENDS from U.S. Government Securities.  On what basis are we assuming that the percentage is the same for CAPITAL GAINS from USG securities?  This is where TurboTax is causing this confusion.  

[DaveF1006]

I am not sure what 5.4% represents but let's assume that this is 5.4% of the dividend reported in the 1099 DIV that is interest and capital gain. Now if your dividend income is $1000. then $54 would be interest and capital gain from USG. This is the amount that will be subtracted from Maryland income in your state return. 

Please read this post reported by CherylW for further clarification.

[Potomac Marylander]

If you do not know the right response, please refrain from providing erroneous reckless info.  There is not one percentage for BOTH dividends and Capital Gains on the 1099-DIV.  Your answer makes absolutely no sense, especially when the original inquiry asks about the percentage of Capital Gains only.  You grouping everything together is stupid and misguiding at best.  As a matter of fact dividends and capital gains aren’t even taxed at the same rate.

Beyond insulting the readers with your simple math skills (5.4% of 1000 is 54, Wow), please take a class on taxes or something.  Thanks.

[DaveF1006]

Yes. You are correct. 5.4% is the % of DIVIDENDS from U.S. Government Securities. Thank you for your input on this matter and your insightful criticism that followed. 

@Potomac Marylander 

@KWR1