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Maine0404
New Member

State taxes: income allocation by state for dividends

I'm doing two partial state returns, one of them Maine. For Maine, the state return asks me to allocate my income sources according to the portion that was earned from sources outside of Maine. This is simple for wages, but I don't know what to do for dividends, all from mutual funds. Is the "source" the location of the actual companies in the funds (can't track ANY state-level locations from Fidelity; it just has percentage of US vs international and the top 10 holdings of the hundreds of companies in the funds) or is it where I was living when I earned the dividends? (The latter doesn't seem right, as I already apportioned out the dividends to what was distributed to me while in Maine.) It's unlikely any of these companies are located in Maine, though not impossible...

So I'm guessing it's either all or nothing, just not sure which. Thanks!
1 Best answer

Accepted Solutions
DanielV01
Employee Tax Expert

State taxes: income allocation by state for dividends

It depends.  When it comes to investment income, the "source" in this case is where you were at the time you earned it.  Since many investments (such as dividends), are reported yearly, it can be very difficult to determine exactly when they were earned.  Thus you can use another method of allocation:  percentages.  Use your wages as the guide.  Divide your Maine wages by the total amount of wages.  Then, use that percentage to multiply against your total dividends, unless, as you mention in your question, you actually do know the amount distributed while still in Maine.

The reason for this is that, when you live in a state, everything you receive as taxable income is taxable to that state.  Thus, your allocation is to determine which dividends you received in Maine, and which you received while in the other state.  If you know the amount; use it.  However, if you are not sure, then calculating the percentage is acceptable also.  

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3 Replies
DanielV01
Employee Tax Expert

State taxes: income allocation by state for dividends

It depends.  When it comes to investment income, the "source" in this case is where you were at the time you earned it.  Since many investments (such as dividends), are reported yearly, it can be very difficult to determine exactly when they were earned.  Thus you can use another method of allocation:  percentages.  Use your wages as the guide.  Divide your Maine wages by the total amount of wages.  Then, use that percentage to multiply against your total dividends, unless, as you mention in your question, you actually do know the amount distributed while still in Maine.

The reason for this is that, when you live in a state, everything you receive as taxable income is taxable to that state.  Thus, your allocation is to determine which dividends you received in Maine, and which you received while in the other state.  If you know the amount; use it.  However, if you are not sure, then calculating the percentage is acceptable also.  

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

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clarajohnson24
New Member

State taxes: income allocation by state for dividends

I have a statement from Raymond James that gives

me a total tax exempt dividends. There is no allocation

given by state.  I have to do a tax return for TN and pay taxes

on any tax exempt dividends from other states.  How can I

determine this amount.  Raymond James could not give me

a breakdown by state.  

JotikaT2
Employee Tax Expert

State taxes: income allocation by state for dividends

It depends.

 

If you are unable to get a breakdown from your brokerage, you can allocate them based upon the ratio of time you resided in each state, if applicable.  Just be sure to keep a record of how you determined the amount reported in each state.  

 

 

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