How do I know what state my tax-exempt dividends are from?

[gtmylan]

I must have 45 or more states listed with percentages. What do I do with all that info - only have about $800 to report

[MargaretL · Accepted solution]

Generally, tax-exempt interest and dividend income is usually reported on year-end statements or a statement from your broker or mutual fund company; it's usually listed on the last pages of the statement.

If you have earned tax exempt dividends in more than one state and the amount is insignificant, you may select "more than one state".

See attached picture.

Note - if you have an electronic error and are looking for a specific code for "more than one state", you can enter "XX".

[mott-jt]

great question.  too bad they didn't answer it.

[simes-c86]

What is amount is 'insignificant', and when does it become 'significant'?

[dgroves974]

I am ready for the last step.  I have paid.  I cannot enter XX in the box.  My return won't file.

[DavidD66]

Does question have anything to do with tax exempt dividends?  If not, can you start a new question.

[annoyed23423]

did you find a solution?

[ErnieS0]

You only need to enter the percentage from your state. The rest will be exempt from federal but taxable to your state.

On the screen Which state are your $XXX.XX of exempt interest-dividends from? Check I earned tax-exempt dividends in more than one state.

In the dropdown, select your state and enter an amount. For example if you had $100 in exempt-interest dividends and your sheet says 10% exempt in your state, enter $10 (10% x $100).

On the next line, enter More than One State (the last choice in the dropdown). Enter the rest of your exempt-interest dividends. For example, if $10 was exempt in your state, enter $90 in More than One State ($100 - $10 you put for your state).

Most mutual fund companies have a tax center that will have a sheet showing the tax exempt percentage for your state. Or you can call the company for the information.

[null94]

Thank you so much! They need to add this to the help pop ups!

[MsC31]

Found a good answer from WealthFront:

Because the underlying bonds that result in these dividends represent a wide range of U.S. states and municipalities, most clients select the option for “Multiple States” and do not select the option for “I earned exempt-interest dividends in more than one state: [Select the FIRST option, then use the dropdown next to it to scroll to the bottom and select "Multiple States". Do NOT select the second option.]

The federal tax exemption for these dividends will apply whether you choose “Multiple States” or provide a state-level breakdown, so it’s really just a matter of the state-level exemption, which is likely very small in proportion. 

Note that state tax rules for exempt-interest dividends vary substantially by state. Some states do not tax exempt-interest dividends earned outside the state or have no personal income tax, in which case choosing “Multiple States” makes no difference. Other states like California allow you to exclude dividends paid by that state but tax dividends paid by other states. Please contact your tax advisor for questions specific to your tax situation.

[rapl54]

I have a 16-page tax reporting statement from the broker. The Form 1099-DIV section  for line 11 shows tax-exempt interest dividends, $385.80. Following  your guidance, I went to the supplemental details in the back of the tax reporting statement. for the source of the dividends.  All I found was the name of the company ( a municipal income mutual fund), and a series of dates when dividends were posted..  There was nothing that would help me answer the question:  Which state(s) are the dividends from?  On the company's website, I found the  fund's portfolio. There are 41 states listed  (plus others  from outside the U.S.)!  So now I could select as a response (1)"I didn't receive the information  you're asking me for," (2) "There is more than one state", or (3) risk that $385.80 might be considered "insignificant enough", particularly with my state income tax return to skip through scrutiny without some dire outcome. Any of these alternatives is unacceptable,in view of the time and frustration I've experienced in attempting to sort out a convoluted situation I did nothing to create. Is there some workaround you could propose?

[GeorgeM777]

If you live in a state with no income tax, then you can select multiple states.  If you live in a state that taxes income, then you can you can following these steps:

1. select I earned exempt-interest dividends in more than one state, 
2. select your state, 
3. then enter the amount of the dividends allocable to your state, 
4. then select Multiple states and enter the remaining balance of the dividends.  

@rapl54

[huffjohndeb]

absolutely it looks like robots are "answering" questions like is used to answer history questions. 

Question explain the war of 1812

My answer the war of 1812 started in 1812.

[booshebach1]

Individual Tax-exempt bonds are easy but in order to claim tax exempt interest for AZ how can you identify that portion from muni mutual funds or ETFs like Vangard or Fidelity. It only shows the total from all states. In order to exempt on AZ state return we need to know what percentage tax free applies to AZ income.