I am asked which state did exempt-interest dividends come-1099-DIV? Is that the state where I live (NC), the state where the financial institution is (NJ), or elsewhere?

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The broker statement that includes Form 1099-DIV should provide additional details you can check. Look through the rest of the broker statement. The tax-exempt dividend will list which portion was from which state or U.S. territory.

Typically, the main deduction would be from your state. If there was a portion that was from your state, this would not be taxed on your state return. Select the state in Box 11.