My advisor's full response: "The tax-exempt interest from the select Municipal bond funds utilized invest across many states. So the amount toward your home state is quite negligible to nothing. Thus making that interest subject to state income tax and only exempt from the federal side."
TT asks for the amount of exempt-interest dividends for each state. I don't have any of that information. What do I do?
Certainly, selecting TX will work (except if you are are resident of UT)..
....But a better choice would be to go to the end of the list of states and select "Multiple States" instead for the entire amount. That's the normal way it's done if you are not going to break out your own state's bonds.
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(Note for Desktop software users....the desktop software has a slightly different selection.. "More than one state" instead. Subtle...but the same effect)
use the state of Texas. no income tax there and all your exempt-interest dividends will be taxed on your state return.
Only the amount earned from state-tax-free securities issued in your own state can be excluded on your state return.
The breakdown by state is usually given by the mutual fund on their website as a percentage.
why would anybody enter tax-exempt amounts from 50 states?
and why would TurboTax ask you for that? You must be misreading it.
Certainly, selecting TX will work (except if you are are resident of UT)..
....But a better choice would be to go to the end of the list of states and select "Multiple States" instead for the entire amount. That's the normal way it's done if you are not going to break out your own state's bonds.
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(Note for Desktop software users....the desktop software has a slightly different selection.. "More than one state" instead. Subtle...but the same effect)
...And here's how you would do it if you did have a lot of $$ from your home state. You only break out your resident state, any US Territory bonds, and the remaining amount is lumped, "Multiple states". An example for a NC resident, for box 11 $$ on a 1099-DIV: (the checkbox on the "Tell Us More..." page is only checked if you want to do the break-out)
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But as another example. Say your box 11 on the 1099-DIV is $1000. And the info from your fund indicates that 2% came from your state. 2% of 1000 = $20. SO I could reduce my state income by $20 by doing the breakout, and save myself $1 in state taxes (at 5% state tax rate). But you have to do the proper calculations yourself to get that $20 value.....and MN and CA don't allow the breakout from a mutual fund collection of bonds unless the Fund holdings contain more than 50% of that particular state's bonds. (and IL doesn't allow a breakout at all from a mutual fund)