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Level 3
posted Mar 3, 2025 11:05:49 AM

deduction: % of treasury from nonqualified dividend or also nondividend distribution?

should I deduct the % in treasury of the "non qualified dividend" or of the sum of "nonqualified dividend" and also "nondividend distribution"?

0 3 734
3 Replies
Expert Alumni
Mar 4, 2025 8:35:43 AM

A non dividend distribution is a "return of capital". You are getting some of your original investment back. It is not taxable. Note that you entered it into TurboTax (TT) via a 1099-DIV, but it doesn't show up on your tax return.

 

Here's more info on Non-Dividend Distributions. 

 

Nonqualified (ordinary) dividends don’t receive any special tax treatment, they’re taxed as ordinary income.  Here's more info on Non-Qualified Dividends.

 

See this Guide to Taxes on Dividends.

 

@Yuppieswewe 

Level 3
Mar 4, 2025 11:28:31 AM

One of my ETF investments gives me qualified dividends, nondividend distribution, nonqualified dividend. 

For State taxes, should I deduct the % of the sum of qualified and non qualified dividend, what the fund invest in Treasuries?

Expert Alumni
Mar 5, 2025 7:43:47 AM

Yes, if your state permits it,  a portion of your qualified and non-qualified dividends might be attributable to Treasury income, which could be exempt from state taxes.

 

If your ETF reports the percentage of its income derived from U.S. Treasury securities, you may be able to exclude that portion from your state taxable income. This information is often provided in the fund's annual statement or tax documents.

 

To determine the exact amount you can deduct, you'll need to:

 

  1. Check the fund's tax statement for the percentage of income derived from Treasuries.
  2. Review your state's tax rules regarding Treasury income and ETF dividends.