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zhang-case
New Member

I'm filling out a 1099 DIV. When it asks "Which state are your $ of exempt interest-dividends from" - is that just the state I lived in?

 
4 Replies
AnthonyC
Level 7

I'm filling out a 1099 DIV. When it asks "Which state are your $ of exempt interest-dividends from" - is that just the state I lived in?

No.  It would be the state that your fund invested in to get the tax exempt dividends.  

In all likelihood, the dividends truly are from more than one state, so you are going to want to select "More than One State" - see screenshot below.  But its possible you can get a tax benefit on your state return if you can identify which state the dividends are from.  The tax benefit you would get would be that your home state would not tax the dividends that come from your state, if there even are any (i.e if the fund invested in California municipal bonds and you are a resident of California, then those dividends would be tax exempt on your state return).  They would still tax the other dividends.

This information would only come from your financial institution.  If it is not listed right on the 1099DIV (which it often is not), then you would need to contact your broker or financial institution for more information about the funds investments.  It might be listed in your year-end reports or a prospectus online.    

Also, you can not worry about trying to find the information and just select more than one state and continue if you: 

 - Live in a state with no income tax (AK, FL, NV, SD, WA, WY)
 - Live where exempt-interest dividends from other states aren't taxed (District of Columbia, IN)
 - Have a small amount of exempt-dividends and aren't concerned with extra state tax. Your state will tax these dividends if you don't live in an area listed above.
colwick01
Level 1

I'm filling out a 1099 DIV. When it asks "Which state are your $ of exempt interest-dividends from" - is that just the state I lived in?

Live in a state with no income tax (AK, FL, NV, SD, WA, WY).   Texas does not have an income tax.

lwang1
Level 2

I'm filling out a 1099 DIV. When it asks "Which state are your $ of exempt interest-dividends from" - is that just the state I lived in?

Are 2021 tax rules changed? If selecting multiple states, not only it requires listing all states but also the $ received from each state. My 1099-DIV doesn't have such info. It doesn't seem realistic to figure them out especially almost all funds invest multiple states, each with tiny percent. How can this be done? Turbo seemed stock here. Shall I fill in my home state with the whole amount?

Also, what about if I moved out of one state to another in the middle of the year? 

RaifH
Expert Alumni

I'm filling out a 1099 DIV. When it asks "Which state are your $ of exempt interest-dividends from" - is that just the state I lived in?

No, you do not want to enter them all as your home state. Generally speaking, dividends received from your home state are not taxable by your home state, but interest received from the other states would be taxable. The dividends from some U.S. territories like Puerto Rico and Guam are also exempt from state tax. 

 

You can either report the entire amount as taxable in your state in the Tell us more about your exempt-interest dividends by selecting I earned exempt-interest dividends in more than one state. Then scroll all the way to the bottom of the list and select multiple states and put in the entire Box 11 exempt-interest dividend amount.

 

You can also separate out your home state and the U.S. territories since those are not taxable in your home state. This may save you a few dollars on your state taxes. Your 1099-DIV should break it down by territory. You can put in the tax-free jurisdictions individually and enter the rest of the states as Multiple States. Just make sure your math is correct, it will not accept it if it does not add up to the entire Box 11 amount. 

 

This has been the law for a while, but you only have to deal with it if you have an amount in Box 11. If the amount is just a few dollars, it is probably not worth the trouble of figuring out which ones are attributable to your home state and U.S. territories.

 

@lwang1

@zhang-case

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