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Animal-spirits
Level 1

US OBLIGATIONS for State tax??

Hi, I'm trying to complete my Maryland State tax return using Turbo-Tax premier. I have some stock/bond investment profits from a successful trade I executed in 2020. Turbo tax says:
"You can exclude capital gains from US Obligations because Maryland doesn't tax them. Enter any portion of your capital gains that came from US obligations."

Federal Total = $2696    Total from US Obligations = (blank space waiting my entry)

 

I looked all over my Vanguard tax forms including the 1099-B which lists this trading profit. No where does it mention "US Obligations", although I know the mutual fund I was invested in contained about half bonds, man of which were govt bonds. The other half were US equities.  The shares I traded was a Vanguard mutual fund called VTMFX.

 

Also, I am filing as a part time resident in Maryland this year. I moved out of state to South Dakota less than 6 months through the year. I realized these profits well after I left Maryland on October 29. So I would think the capital gain would not be taxable in Maryland anyway.

 

Can someone advise me on how to handle this entry?

Thank you

7 Replies
ErnieS0
Employee Tax Expert

US OBLIGATIONS for State tax??

Part-year residents are only taxed on income while residents of that state. Stocks and bonds sold while you were living in South Dakota are allocable to South Dakota, a state with no income tax. Therefore, those capital gains or losses should not be reported on your Maryland income tax return.

 

I did not see any information concerning U.S obligations for your specific fund in the Vanguard  tax center. Consult with Vanguard.

 

Subtract your capital gains by entering a positive amount as Non-Maryland income on the screen Additional Info for Part-Year Residents.

Animal-spirits
Level 1

US OBLIGATIONS for State tax??

Thank you Ernie! I did just as you said. I left the box vacant for US Obligations and simply added the capital gain income to the other income I earned while outside of Maryland so that it is exempted. I really appreciate your prompt and professional response. Thanks again, stay safe. 

Dsf4man
Level 2

US OBLIGATIONS for State tax??

Part of this question regarding  Capital Gains From U.S. Obligation are Tax Free in my state of Maryland but I'm a full time resident. I have a Fidelity brokerage account that I allowed TurboTax to import the data. I'm at the point in my MD return where it shows Capital Gains/Federal Total $xxxx and it's waiting for me to enter Total from US. Obligations. When I look at my 1099B, I see two companies that I'm certain are foregin and sold at a loss, and the amount that shows as a gain is more than the amount of federal total cited above. I hope that entering one of these two number in the blank spots is correct but which one? Please advise 

 

gloriah5200
Expert Alumni

US OBLIGATIONS for State tax??

When you receive by mail a paper copy of the 1099-Bs, there should be supporting documentation that tells you how to calculate the amount of any investments that are invested in US Government resources.  Then, when you get that information you can make an adjustment to your state tax return.

 

You cannot make estimates without documentation for subtraction of income on your MD return.

Dsf4man
Level 2

US OBLIGATIONS for State tax??

Thanks for your reply, but I've downloaded my tax statement and won't be getting anything in the mail. Under the column that says 14 State 16 State tax withheld is shows 0, so I may have to contact Fidelity to see that number on their 1099B form. 

 

buscherj2gmailcom
Returning Member

US OBLIGATIONS for State tax??

I have the same question. My 1099B form from LPL does not show any US Obligations. I am positive that whatever I put in the MD blank will not impact my tax refund but want to do what is correct. I contacted LPL and was told to put what in on page 9, where it lists Federal taxes. I don't have US bonds or Treasury notes that I know of.  I wonder why MD has this question, when it is not reported on 1099B forms, as noted from previous people with similar question.

 

Thanks for your advice.

MarilynG1
Employee Tax Expert

US OBLIGATIONS for State tax??

Since many 1099-B's do report income from US Obligations, the question is probably asked of anyone with a 1099-B (or 1099-Div or 1099-Int)  in their return.

 

Since you have no US Bonds/Treasury amounts on your 1099-B, leave the Maryland field blank.

 

The only interest that is state-tax-free is interest from a MD municipality.

 

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