Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
21hammer
New Member

Tax exempt Interest and Dividends for CA. Not sure what to enter in popup box after checking Yes to original question. Entire interest from fund or just CA portion?

 
3 Replies
DianeW
Expert Alumni

Tax exempt Interest and Dividends for CA. Not sure what to enter in popup box after checking Yes to original question. Entire interest from fund or just CA portion?

If you know the tax-exempt interest is strictly generated from California (CA) holdings then you can enter the full amount under CA.  If it is earned through a "fund", then read the rest of the information to find the correct percentage for CA.

Such federal tax-exempt dividends are not always tax-exempt for state.  State-taxable dividends often come from mutual funds or Exchange Traded Funds (ETFs) that hold a multi-state portfolio of municipal bonds.  All of the income from those bonds, other than than those issued within your home state, are taxable by your home state.  Thus, we need to "adjust" the Form 1099-DIV, Box 10 entry to account for that fact for your state return.

In TurboTax, this is manually done in the 1099-DIV interview.  The specific numbers you use will be based on the percentages that are provided with the Form 1099-DIV, so you can make the appropriate adjustment(s) to your exact circumstances.  

  1. Search for 1099div > Jump to 1099div 
  2. Click the box if your form has more boxes
  3. Continue and  to select uncommon situations that apply
  4. Enter the appropriate state information from the instruction guide provided by your financial agent
  5. Click the images attached to enlarge and view for assistance.
huilam1942
Level 2

Tax exempt Interest and Dividends for CA. Not sure what to enter in popup box after checking Yes to original question. Entire interest from fund or just CA portion?

May be it is easier to compute what is taxable for CA from the federally tax exempt amount first based on information provided by the investment company and enter the amounts which are taxable for CA and the portion which is not when TurboTax starts the interview on Tax Exempt Funds when it recognizes one has income from Tax Exempt Funds  

AmyC
Expert Alumni

Tax exempt Interest and Dividends for CA. Not sure what to enter in popup box after checking Yes to original question. Entire interest from fund or just CA portion?

Yes, that is a quick and easy way since you only care about making sure CA is right, subtract it from the total and you have it. Excellent work!

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Dynamic AdsDynamic Ads
Privacy Settings
v