Do I need to report "federally tax exempt interest dividends" from 1099 DIV in Michigan Schedule 1 line 1?

[kelangov]

Do I need to report "federally tax exempt interest dividends" from 1099 DIV in "Michigan Schedule 1 Additions and Subtractions", line 1"?

Michigan form "Schedule 1 Additions and Subtractions", line 1 states "Gross interest and dividends from obligations issued by states (other than Michigan) or their political subdivisions".

In my case, I have $$ from Fidelity 1099 DIV line 11 "Exempt Interest Dividends", which were federally tax exempt.

Do I need to report those $$ in line 1 in schedule 1?

Thanks.

EE

[SteamTrain]

Yes...but they should automatically transfer form the Federal section.  (also for any $$ in box 8 of a 1099-INT form too)

Edit the 1099-DIV form, On one of the pages following the main -DIV page there is a page where you can select the state(s) the bond interest came FROM....You select "Multiple sates" from the end of the list of states,a dn then those $$ will transfer to line 1 of the Schedule 1.  (You do not select "MI"....that's where you live, not where the $ came from).

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As an option, you can (but do not have to ) select the second box and break out the MI-only $$ amount...but usually it doesn't result in much of a state tax advantage unless you carefully invested in MI-only bonds....AND, you have to calculate the MI-only $$ amount form the data that Fidelity provides on separate information sheets.

Here's an example on how it's done for an NC resident  (old picture...actually box 11 total now :(

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[KathrynG3]

No. Federally tax-exempt dividends are a subtraction on the Michigan return. TurboTax will properly allocate this based on your 1099-DIV entries.

Additions on line 1 of Schedule 1 for the Michigan return include tax-exempt dividends from states other than Michigan.

2019 MI-1040 Instructions for Schedule 1 Subtractions page 13:

Enter income from U.S. government obligations (e.g., Series EE bonds, Treasury notes), including income from U.S. government obligations received through a partnership, S corporation, or other pass-through entity. This subtraction must be reduced by related expenses used to arrive at AGI. Investment companies that invest in U.S. obligations are permitted to pass the tax-free exemption to their shareholders. If income from U.S. government obligations exceeds $5,000, include a copy of your U.S. Schedule B and a supporting statement listing the amounts received, the source, and the issuing agency. Capital gains from the sale of U.S. government obligations must be adjusted on your MI‑1040D.

[SteamTrain]

@KathrynG3 

We Disagree somewhat on the details.....user indicated box 11 on 1099-DIV.

Most of those are "likely" non-MI bonds from Mutual funds, from mostly non-MI states....and those amounts are add-backs to MI income.....(unless the User breaks out the MI-Only interest).

Fidelity has no MI-specific bond funds.....the Muni funds Fidelity does have yields between 1% to a max of 10% in MI bond interest...depending on what fund the user invested in.

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The only MI "subtraction" would be for federally "taxable" interest in box 3 on a 1099-INT.

...or if the user has box 1a value on the 1099-DIV, of which some of it came form US bonds, and the user calculates the proper sub-amount that came from US bonds, and a separate special page....but the user has to do that extra calculation themselves...if they choose to do so.

[kelangov]

Thanks SteamTrain.

I don't have a way to break it down to Michigan amounts versus other states. 

I did 'check' that the exempt interest dividends were from "more than one state", in federal return.

I will now go ahead and e-file Michigan.

Thanks for your assistance.

EE