Non-Mass muni fund interest is incorrectly included on Mass Schedule B Line 6. How do I fix this?

[kargelz]

I live in Massachusetts. I have two muni bond funds that pay dividends from various states, including Massachusetts. The imported 1099-DIV correctly shows the total of all states at Wages & Income > Dividends > [brokerage] > box 12. In the interview at "tell us more about your exempt-interest dividends," I have checked the box "I earned exempt-interest dividends in more than one state", entered the Mass total on a Massachusetts line, and the balance on a "Multiple States" line. However, the Mass "Int/Div Excl" worksheet line 4 and Mass Schedule B line 6a both include the total amount from all states, not just the Massachusetts amount. I have tried to edit the amount in the Int/Div Excl directly, but that line is protected and cannot be edited. How do I fix this?

[SteamTrain · Accepted solution]

@kargelz 

Edit that 1099-DIV again

When you get to the page where you divide up the state amounts:

1) Re-select the first button.....and set that state to "Multiple States"   (do not set to MA)

2) Then select the second button.  The numbers should remain from how you divided it earlier. But edit them if needed

3) Then you need to hit the Continue to move on.   The numbers should now be OK on the MA Sched B.

Please reply if this worked for you.....or not.

And...when you initially re-selected that first button...what state setting was in it?

_____________________

[kargelz]

I'm afraid that didn't work. No matter what I set those to boxes to (Multiple States, Massachusetts, U.S. Virgin Islands, etc.) the total goes into Mass Schedule B. And I can't only specify Mass exempt income on that screen because it enforces that those boxes add up to the total on the 1099-DIV. And I can't change the total on the 1099-DIV because that feeds into the federal return and elsewhere in the Mass return. Any other suggestions?

[SteamTrain]

@kargelz 

Yeah..one other suggestion.

Subtract out just the MA $$ from box 12 the existing1099-DIV....and what remains gets all designated as "Multiple States" in the first button follow-up.

Then put just the MA $$ into box 12 of an entirely separate 1099-DIV  (as-If from the same provider)...then designate it all as being MA in the first button follow-up page.

That "should" work.

_____________________________

Other:

Someone else had messy problems with a 1099-DIV form and those state $$ breakups, where they had uploaded a PDF of their 1099-DIV form...and had not manually entered it, nor did they import it directly from the -DIV provider.  They cleared it up (mostly) by deleting the 1099-DIV and entering it manually...and using the procedure I noted in my first post.....but the procedure in this post should work (if my  First suggestion doesn't.)

[kargelz]

Thank you. Creating a second "dummy" 1099-DIV does work, but it also results in two lines on the federal Schedule B, neither of which matches the amount on the 1099-DIV that the IRS received. (The total is correct, of course.) Does that not increase the risk of getting flagged?

[SteamTrain]

@kargelz 

It's on the worksheet as two entries...but on the actual final Schedule B, the second one doesn't, because that second 1099-DIV only contains tax-exempt $$ and tax-exempt $$ only end up on form 1040, line 2a.  (The tax-exempt $$ from the first 1099-DIV don't show on the final Sched B either...just the Sched B worksheet...that supposedly, only TTX uses)

I don't "think" the IRS gets that worksheet, but can't be sure.   Might not make a difference as long as line 2a on the 1040 shows the proper total.

___________________

Wish I had the MA software..so I could troubleshoot better.  The first procedure I noted was the workaround for my NC software....but every state's software set may not pull values the same way.

[kargelz · Accepted solution]

The best answer turned out to be something that SteamTrain said in their first post: Delete the problematic 1099-DIV and re-enter its data manually. I then specified "Massachusetts" vs. "Multi State" income in the interview, and TT correctly captured the Massachusetts income only to Mass. Schedule B.