Fidelity Government Money Market

[Songman53]

Fidelity identifies in the prospectus that 37% of the money fund symbol FDRXX is directly from US Government bonds. The rest is Agency bonds such as Fannie Mae, FHLB and Ginnie Mae etc. and these ARE taxable or the % of the income from these agency bonds in most states are taxable. The problem I have is that the turbo tax program imports the entire amount as 1099-DIV's and subjects the entire amount to federal tax and state tax. The entire amount is subject to Federal tax but the 37% that is direct government bonds such as treasuries is not subject to state tax in many states. But somehow even though turbo tax asked how much of the fund is direct government interest they still pulled in the entire amount into my Massachusetts return and the state taxed the entire amount. What did I not click properly, or do I have to override the system? Thanks, please help... 

[Songman53]

By the way I have turbo tax Premier

[AmyC]

Follow these steps:

1. Edit your 1099-DIV
2. After the income entry, continue
3. Uncommon Situations - select a portion are US Government interest
4. Enter the dollar value that represents that percentage.

Any amounts in box 12 should automatically pull over as nontaxable income.

If you have municipal or other exempt interest, you can enter state amounts on the next screen.

You can switch over to Forms mode and view the forms to be sure the income is no longer taxed.

[Songman53]

No tax-exempt interest municipal at all!  So, Ignore that field correct? Thanks for being so responsive!

[AmyC]

Yes and you are very welcome. Have a great night!

[Brightsquirrel]

Great Question.  I never knew this!  

I may have found a better source for the necessary info.  Fidelity posts on their website a pdf of all funds that have this income.  Sorry can't paste in the link here.  But the schedule is located on the "Fidelity Mutual Fund Tax Information Page" and is called "Percentage of Income From US Government Securities"

[baldietax]

yes the %s in the supplemental tax info provided by the fund firm is exactly the source to use for these calculations, not the prospectus or other asset allocation information.

[Songman 53]

thanks this covers many mutual funds but not all the money markets. Big help though!

[baldietax]

are you referring to this

https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/taxes/TY24GSESupplementalLetter.p...

everything should be covered but MM fund symbols are not all listed ("Various") you have to look up by name.  But FDRXX from your original question is there and listed as 57.19% which will include certain agencies such as FHLB which are state exempt, but Fannie, Freddie and GNMA are usually taxable.  Vanguard equivalent has a useful footnote as to what usually qualifies as US Gov Obligation:

Investments in U.S. government obligations may include the following: Federal Farm Credit Banks, Federal Home Loan Banks, the Student Loan Marketing Association, the Tennessee Valley Authority, the U.S. Treasury Department (bonds, notes, bills, certificates, and savings bonds), and certain other U.S. government obligations. GNMA, FNMA, Freddie Mac, repurchase agreements (including those that involve U.S. government obligations), and certain other securities are generally subject to state and local taxes.

https://investor.vanguard.com/content/dam/retail/publicsite/en/documents/taxes/USGO_012025.pdf

[Songman 53]

excellent! thanks....