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Yes, you need to report it. Exempt-interest dividends are not taxable on your federal return, however, they may be subject to state income tax or the Alternative Minimum Tax (AMT).
are these muni-interest dividends? report but maybe taxable for state if you have a state income tax? Or are these return of capital dividends/nondividend distributions on line 3 of 1099-DIV which you don't need to report.
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