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3d32cdf5b8b3
New Member

My exempt interest dividends were included in your total as income, thus will I be paying income tax on the dividends ?

 
2 Replies
WendyN2
Level 6

My exempt interest dividends were included in your total as income, thus will I be paying income tax on the dividends ?

Exempt interest dividends from mutual funds aren't taxable, but you should report them on your return if you're required to fileDividends exempt from interest might be subject to Alternative Minimum Tax (AMT).

 

Since I am not seeing that you've specified US Govt Interest I am going to proceed with assuming that you do mean "Tax-Exempt Interest on Dividends".

 

Return to the section "Federal Taxes" - "Wages and Income" - select "I'll choose what I want to work on" and click on "Continue. Now, on the page titled "Your 2020 Income Summary", scroll down to the section titled "Interest and Dividends" and review the section for "Dividends" to be sure that you properly categorized the amount that is meant to be under exempt. You will see on that first screen after clicking "Start" or "Review" at the "Interest and Dividends" section that it states NOT to enter tax exempt interest on dividends here - so make sure this is not where you put this amount as it belongs in the "Interest" section and not the "Dividends" section. If this is what you've done, just continue to the end where you come to the page titled "Here's the Dividend Info we have so far" and delete the item from here by clicking on the trash can to the far right of that line item. It will ask you to verify that you wish to delete this form - select "Yes". 

 

Now, go back to the "Your 2020 Income Summary" page and instead of selecting "Dividends", you will select "Interest" under the respective section. Once you get to the page titled "Let's get your 1099-INT or brokerage statement details", enter in the information for payor STOP, then CHECK THE BOX to the left of the statement below the payor information "My form has info in more than just box 1". You will now see a bunch of additional boxes - box #8 is where you will want to enter this amount. 

SteamTrain
Level 15

My exempt interest dividends were included in your total as income, thus will I be paying income tax on the dividends ?

 

Well, you do have to enter those exempt interest/dividends on whatever tax form & box that the Fund or brokerage actually provided to you.....don't move them around yourself to someplace else......(just in case that isn't clear)

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IF the $$ are in box 11 of a 1099-DIV form ...then they go in box 11 of the 1099-DIV form...whether you call them exempt dividends or exempt interest is immaterial.  Box 11 $$ make them exempt from Federal taxes (except for some that might be subject to AMT)  .

 

IF the $$ are in box 8 of a 1099-INT form...then that's where they go in the software...box 8 of a 1099-INT.

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That being said...you'd have to better describe exactly what you are looking at.

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IF you are looking at the tax summary menu page...where you are shown a column of $$ for 2020 for all the entries made on the Wages&Income page.....then FYI, the tax software lists

1)  the TOTAL of interest plus tax-exempt interest from your 1099-INT entries.

2) The TOTAL of all dividends, AND tax-exempt dividends from your 1099-DIV forms.

 

But those totals do not reflect what part is being taxed, and what is not.... as long as you entered them all in the proper boxes on the 1099-INT and 1099-DIV forms...they are handled properly in the Federal software and forms.

 

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LATER: In the "Desktop" software there is an extra  Summary page: 

"Here's a Picture of Your 2020 Income"

.....that adds in tax-exempt $$ in the total...but again, that is just a summary Total income , and does not indicate whether it is being taxed or not.

 

(( BUT....you indicated you were using the ""Online" software when you started this question) )

*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
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