Hi everyone!
I received a 1099-DIV form, and after entering it into TurboTax, I'm asked to check a box if "A portion of these dividends is US Government interest." I've been digging into the TT forums trying to figure out how to determine 1) if any of my dividends meet this criteria, and 2) if so, how the heck to find the exact amount of US Government interest to then enter into the following screen. This whole ordeal honestly seems like a huge headache that — at least for me personally — is not worth it.
So this is my question: do I have to tell the IRS what portion of my dividends represent interest from US Government obligations, or can I just skip this and not check the box? I'm happy to pay a little more in taxes if I don't have to deal with this, I just don't want to get in trouble with the IRS.
Thanks so much!
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The IRS doesn't care if your income is from government bonds or not. The question is asked because states do not tax government bonds. You can just say that one of is from government bonds. Unless it is a government bond mutual fund not much of a funds dividend is from government obligations. If you don't want to deal with the hassle then just ignore it and continue.
It depends on what you invested it, if you can even get that information. For example, if you live in NY, NY will not tax NY state bonds (but will tax other state bonds). This is easy to figure out if you directly purchase NY bonds on the bond market. But if you buy a mutual fund that invests in bonds, it might be that only a small percentage of your dividends is from your home state. If the bond company can tell you where the dividends come from, you can put that in Turbotax and save the state tax on that tiny portion of the dividends. But it may be impossible for the company to even tell you.
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