Treasury Bond interest in the form of dividends from ETF not recognized by New Mexico Turbo Tax in 2025

[orwellflash]

This may be a problem with all state turbo tax software, but it certainly is a problem for New Mexico.  The only treasury bond interest recognized by TT was that paid as interest from a UST bond .  UST interest in the form of dividends from Vanguard ETF (and presumably from mutual funds also) downloaded from Vanguard by TT was not automatically entered as UST interest on NM return.   TT also did not flag the issue for me.  I had to open the forms in the software and manually enter the information.  If I hadn't noticed the error, I would have overpaid by $1500.

[SteamTrain · Accepted solution]

@orwellflash 

When dividends of any type, show up in box 1a of a 1099-DIV form  (As they normally do from an ETF), even of they are 100% from US Obligations, the software doesn't know it right off the bat, because other non-US bond $$ and stock dividends feed into box 1a too.    The "Supplemental" information provided on the extra sheets from Vanguard (and other brokerages) about what amounts were from US Bond obligations, does not get into anybody's tax software anywhere.     (Maybe someday the brokerages and tax software companies will figure out how to format it, but I suspect it will not  be any time soon)

Only $$ showing in box 3 of a 1099-INT will automatically transfer to the state software as being state exempt on the state forms.

INSTEAD....For any 1099-DIV form, where US obligation dividends are part of the box 1a $$ of a 1099-DIV, you need to calculate exactly what the sub-amount of US Bond $$ is being represented in box 1a......then, on the page AFTER the main 1099-DIV form, the is a checkbox question you check for "A portion of these dividends is US Government interest"....and then you "Continue " to the next page where you can enter the exact US Govt $$ amount.    THEN that $$ amount is transferred to the state forms  (along with any 1099-INT box 3 $$).

[orwellflash]

Thanks, you are correct.  I missed it, at least in part, because the screen reads "this is uncommon", which I think is misleading, and because I thought the prompt had previously been in the NM state software.  I hope this information proves to be useful to others.

Do these uncommon situations apply?

A portion of these dividends is U.S. Government interest. Learn more

I need to adjust these dividends or this is an ESOP distribution.

Some qualified dividends or section 199A dividends are from securities that didn't meet the required holding period. Learn more

I got a statement with Section 1202 info. Learn more

None of these apply.