TurboTax Div Worksheet for Maryland / (and any other state and Fed tax exemptions)

[ThomasCKo]

Hello.  Following TurboTax instructions, when I enter my box 12 federal 1099DIV, these are exempt from Federal  tax being state municipal bonds.  One DIV account does not include MD as any bond holder in its portfolio, and Im having to assume they are fully taxed by MD (all payments made from other states).  However I have one account that does have MD bond parties, and the question on the state calc allocations seems to be reverse (even in popup TT help example with CA).  For example I am resident state ID MD and on $20000 exempt, I enter the 4%related to MD, but the totals on TT State seem to be missing the larger amount 96% amount on MD taxes,

  1) MD 4%    $800

  2) XX 96%   $19200

The TT system / example show you need state MD first, then all others XX on next line, so only 4% is transferring to MD section and 96% as not MD state taxed.   Am I using TT incorrectly, is there a bug, or are my assumptions wrong?  Thxs any guidance recommendation

[AnnetteB6]

You are entering your information correctly if only 4% of your municipal bond interest was attributable to a Maryland obligation.  This portion of the municipal bond interest is not taxed on your Maryland return, but the other 96% will be.  

When you take a look at your MD Form 502, line 2 will include the bond interest from obligations outside of Maryland ($19,200).  This amount is added to your Maryland income before the income tax is calculated.  

From the 2023 Maryland Resident Tax Forms and Instructions page 12:

  Line 2. TAX EXEMPT STATE OR LOCAL BOND INTEREST.
Enter the interest from non-Maryland state or local bonds or other obligations (less related expenses). This includes interest from mutual funds that invest in non-Maryland state or local obligations. Interest earned on obligations of Maryland or any Maryland subdivision is exempt from Maryland tax and should not be entered on this line.
 

If you take a closer look at your Maryland return and find that your information is not correct, consider providing a diagnostic tax file so we can take a closer look at your return.

The diagnostic file will not contain personally identifiable information, only numbers related to your tax forms.  If you would like to provide us with the diagnostic file, follow the instructions below and post the token number along with which version of TurboTax you are using and what states you are filing in addition to Maryland in a follow-up thread.

Use these steps if you are using TurboTax Online:

• Sign in to your account and be sure you are in your tax return.
• Select Tax Tools in the menu to the left.
• Select Tools.
• Select Share my file with agent.
• A pop-up message will appear, select OK to send the sanitized diagnostic copy to us.
• Post the token number here. 

If you are using a CD/downloaded version of TurboTax, use these steps:

• Select Online at the top of the screen.
• Select Send Tax File to Agent.
• Click OK.
• Post the token number here.