Entering taX EXEMPT DIVIDENDS on NJ 1040

[bill79]

Turbo tax does not allow customer input on the NJ 1040, and there is no place on the federal return to enter tax exempt dividends Therefore there is no carry over to the NJ form.Turbo Tax must provide for entries on lines 16 a and b on the NJ 1040. If not corrected customer cannot use turbo tax to E file a NJ return.

[JulieS]

Yes, there is a place to enter tax exempt interest dividends in TurboTax. Here is how to find it:

1. Login and continue your return.
2. Select Federal from the menu on the left, then Dividends.
3. Add a new 1099-DIV or edit the one you have already entered.
4. On the first screen, look for My form has info in other boxes (this is uncommon) near the bottom of the screen, check the box.
5. Boxes 3 through 15 will appear. Box 11 is normally used for tax exempt dividends.
6. You will get additional options on the next screen.
7. The next screen asks for the associated state for the dividends.

[wolfepack8888]

I have entered the NJ state and then all other states tax exempt interest.  When I get to my NJ state return the NJ tax exempt piece is not being applied and all tax exempt dividends from my federal form are being added back.  

[AmyC]

@wolfepack8888 I created a NJ return, added exempt dividends. I marked them as from NJ in the federal section. They are not showing on my NJ return. I have no problem to match yours.  You can fill this form out for someone to call you.

One thought is that the data is stuck. Here is how to get rid of stuck data:

1. Delete the form:
   1. How to Delete  Log out of your return
   2. 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.
   4. Enter the form again.

[swabbinsky]

So how do I get the federal piece in there.  I can enter NJ with it's amount but federal obligations are also tax exempt (e.g. Puerto Rico, DC, Virgin Islands).   I tried entering those as states and then the remainder as  multiple states but the total of NJ+PR+DC+VI does not come over the NJ.

[ErnieS0]

The federal portion goes on another screen. Right after the 1099-DIV screen you will see Tell us if any of these uncommon situations apply to you. Select A portion of these dividends is U.S. Government interest.

The federal government taxes income you receive from its own bonds. Although your state doesn't tax income generated by U.S. government bonds, each state defines government bonds differently.

[swabbinsky]

thanks, yes that did it.  It was confusing because I figured out that it was carrying Puerto Rico and the Virgin Is as exempt but not DC.

[SteamTrain]

@ErnieS0   Sorry, but that Govt Interest checkbox only refers to amounts that are included in box 1a of the 1099-DIV...not to $$ in box 11 from US Territories or DC

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@swabbinsky 

A few others have occasionally had problems with this too.  Don't know whether it was the result of an Imported 1099-DIV or something else.

BUT...what they did to fix it  was to remove just the $$ from box 11 that belonged to NJ, DC & US Territories, and create a new 1099-DIV with just the box 11 amount from those bonds.  The $$ remaining in box 11 of the original 1099-DIV was tagged as all from "Multiple States" and on the new 1099-DIV, broken out as coming from NJ/DC/US Territories since it no only contains those as their entire amount.

Someone else implied that the problem only happened when reusing a 1099-DIV form that transferred in form the prior year's file...dn deleting that particular _DIV form and starting anew fixed it.

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IF you are actually holding those as individual bonds, and not in a Mutual Bond Fund, then the $$ are reported in box 8 of a 1099-INT instead...but the state/territory break-out is handled similarly.

[ErnieS0]

You are correct @SteamTrain. U.S Territories does not belong in U.S. government interest. I answered half the question there about where to put federal interest.

@swabbinsky New Jersey exempts interest received from D.C., Puerto Rico, or the Virgin Islands so include those in your "NJ amounts" so they will be exempt from state tax.

Related Resource:

• Nontaxable Investment Income Understanding Income Tax

[SteamTrain]

I was digging around to see if NJ really exempted DC bond interest....I didn't find any references that NJ exempted that.....but maybe you have some more detailed references.

[swabbinsky]

thanks for the correction.  I didn't look to see whether box 1 carried, but will combine as suggested.  I also thought to enter NJ for each with the appropriate DC etc dollars.  It might be better documentation as I can then match the amounts with m spreadsheet calcs.  Is there any reason not to enter multiple NJs?

Yes, I have the GIT-5.

[swabbinsky]

from the NJ GIT-5:

Federal Securities (continued)

Security                                                                        Interest     Capital Gain

If issued in D.C., Puerto Rico, or the Virgin Islands          E                 E

https://www.state.nj.us/treasury/taxation/pdf/pubs/tgi-ee/git5.pdf 

[SteamTrain]

Yep....I had dug around some on the NJ website, but hadn't noticed that GIT-5 PDF.  Good find.

I knew a few state exempt interest from DC bonds, but many don't.  Looks like NJ is one that does.   Wonder why they don't include the other US Territories .....maybe the others have never issued any bonds.

[SteamTrain]

On a 1099-DIV, usually almost all of box 1a will automatically be included in state income.   Box 1a "can" contain some US govt interest, but is usually a mix of a lot of stock dividends, Mutual fund dividends and short term capital gains along with some US Govt Bond interest.   (DC, USVI & PR would only be in box 11, not 1a)

Of course, if you do have some US Govt bond interest, once you calculate how much it is, it would be taken out for state taxation by using the checkbox that @ErnieS0  described above.