1099-DIV - VA state tax implications?

[Suchin21]

Regarding our 1099-DIV from Invesco, I am confused as to how/where, on our federal tax return, I am to enter the amount of tax that would decrease our tax obligation to Virgina. I have one fund that seems to have state tax implications listed on Invesco's "Federal interest earned derived from government obligations" table that came with their 1099-DIV.

The fund name is Invesco AMT-Free Municipal Income Fund. This table shows .34% under this fund for Virginia, but I do not know what I am to do with this percentage or how/where to enter it in our federal return so that it feeds properly into our state return. Am I to multiply .34% by the value in box 12 (Exempt Interest Dividends) or the value in box 1a (Total Ordinary Dividends)? Specifically what screens do I enter this amount in Turbo Tax, federal and state?

Thanks so much.

[SteamTrain]

@Suchin21 

It refers to box 12 of that 1099-DIV....but if you hold other funds that contributed to box 12 on that same 1099-DIV form, then it only refers to that particular Invesco Fund's $$ contribution to box 12.   That exact $$ amount you'd have to get from some additional supplemental details as to how much gross was in box 12 form the Invesco fund.

For such a low %, it might not be worth the bother to break out the VA $$ amount....other than as a future use exercise. Especially if box 12 is a low $$ amount.

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Example:  If box 12 had $1000, and if ALL was from that Invesco fund.  Then (0.0034 x 1000) = $3.40 was from VA bonds.

So that reduces your VA income by $3.40  .....and if that was taxed by VA at (say) 5%....you might save yourself  17cents in VA taxes   (except many times, tax tables are used, so it might not save you even 17 cents)

[Suchin21]

Thanks for your response.

Since it is not worth it, based on your example, what do I do, just not check off the box for "A portion of these dividends is U.S. Government interest"?

Out of curiosity, and for future reference, if it was worth it to break out the VA $$, where would that be entered?

Thanks again.

[SteamTrain]

1) For the checkbox "A portion of these dividends is U.S. Government interest", if you don't have any US govt $$ to enter (referring only to a sub-portion of the box 1a $$) , then you wouldn't check that box at all....and go down to the "None......." checkbox instead

2)  and on another page or 2 later...For the box 12 $$, the VA bond $$, a page asks something like "Which state are your $xxxx of exempt-interest dividends from?".......and you'd scroll to the bottom of the list of states, and select the choice: "Multiple States" since the $$ in box 12 came from a bunch of different states.

[Suchin21]

I'm more confused then before now, sorry. Is your response addressing what I do if it's not worth the bother to break out the VA $$ amount?

>>>>>>>>>>>>>>>>

1) For the checkbox "A portion of these dividends is U.S. Government interest", if you don't have any US govt $$ to enter (referring only to a sub-portion of the box 1a $$) , then you wouldn't check that box at all....and go down to the "None......." checkbox instead

How do I know if I have any US govt $$ to enter? Not sure what you mean by referring to a sub-portion of the box 1a $$. I haven't seen anything asking about box 1a except where it is entered straight into the corresponding box in TT.

2)  and on another page or 2 later...For the box 12 $$, the VA bond $$, a page asks something like "Which state are your $xxxx of exempt-interest dividends from?".......and you'd scroll to the bottom of the list of states, and select the choice: "Multiple States" since the $$ in box 12 came from a bunch of different states.

How do you know the choice is "multiple states"? Because the fund I'm referring to (Invesco AMT-Free Municipal Income Fund) is not specific to one state?

Again, so sorry for my ignorance. I appreciate your help!

[SteamTrain]

1)  The checkbox for US govt dividends....it has nothing to do with $$ from VA Bonds that are represented in some small sub-part of box 12. 

The checkbox for US govt dividends only refers to box 1a $$.....  You'd only know to check that box, and how many $$ to put in there if you have documentation from some Bond fund you owned that told you what % of their distribution $$ came from US Govt Bonds.    If you don't know, or can't find it, you'd not check that box.

Yes, any US govt Bond interest that might be included in box 1a, would not be taxable by VA....but you'd need to find the documentation about that from whatever supplement information the provider of that 1099-DIV publishes elsewhere  (Fidelity has a PDF to download from their website for their own bond funds.)

2) The Invesco Fund......you indicated it said 0.34% was from VA bonds....so there must be a detailed list where you got that number...yes...no? But I couldn't help you find that...talk to Invesco to get the full list.   IF 0.34% was from VA, the rest had to be from other states...which states is not important to you or the tax software.  (Though the % from Puerto Rico, or Guam bonds might bump that 0.34% up some....VA doesn't tax those "US Territory" bond $$ either)

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I didn't find their listing of % by states ...but their top-10 listing here shows a bunch of different cities/states...so it is definitely "Multiple States":

Invesco | Product Detail | Invesco AMT-Free Municipal Income Fund

[Suchin21]

I have the full list from Invecso. I only assumed it was related to government because of too much internet research that seemed to co-mingle the two topics.  I thought that the portion that wasn't VA was US govt bonds not other states. So I don't need to worry about that checkbox. Thanks for explaining.

My bottom line question is what exactly do I need to fill out (or not fill out) in TT in order to not worry about the VA $$ since it's only .34%? Did you answer this already in your previous response?:

1) For the checkbox "A portion of these dividends is U.S. Government interest"... you wouldn't check that box at all....and go down to the "None......." checkbox instead

2)  and on another page or 2 later...For the box 12 $$, the VA bond $$, a page asks something like "Which state are your $xxxx of exempt-interest dividends from?".......and you'd scroll to the bottom of the list of states, and select the choice: "Multiple States" since the $$ in box 12 came from a bunch of different states.

[SteamTrain]

@Suchin21 

Well...issue #1was taken care of.

For #2, when you edit the 1099-DIV form, and go thru the pages that follow, you will hit the one I show below.....where you are hitting the top button, and are selecting "Multiple States" from the selection at the very bottom of the list of states.

You should note that this selection does not affect your Federal taxes, it only has an effect on your state taxes.  You are not "required" to break out your own state's $$, and are always permitted to just select   "Multiple States" for the entire amount listed at the top of that page....which is what you are planning to do.

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[SteamTrain]

Now, at some point in the future, the $$ in box 12 may get high enough that you do want to break out the $$ that came from VA bonds.  Doing so can potentially reduce your VA taxes somewhat.  You should also note that listing the $$ from US Territory bonds (Guam, Puerto Rico, US Virgin Islands..etc), that the Muni Bond fund might own, can also be broken out too for some additional VA income deduction dollars.

To do that, some year in the future, you would select the lower button selection (as shown below), And break out your calculated VA and US Territory $$, similar to how I show it below for a NC resident.

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[Suchin21]

Got it now! Thanks so much for the screens shots and the explanation on what to do for future.