% of US government interest calculation from 1099-DIV

[Yuppieswewe]

How can I calculate the % of US government interest on an investment dividend?

I know for example that for "fidelity GOVT MMKT" it was 55.08% in 2024.

What do I apply this % to?

I have these columns in the detailed tax report from the brokerage:

- ordinary dividends

- qualified dividends

- federal income tax withheld

- section 199A dividends

- foreign tax paid

-capital gain distributions

-foreign source income

- qualified foreign source income

thanks!

[baldietax]

in the details of the 1099 you need to find the amount of dividends included in Box 1a that were paid by that fund, and multiply that amount by that % to get the $ amount to input for the US Gov Obligations

[baldietax]

Also, this doc from Fidelity explains the % multiplication on first page so you have something official on it

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

Btw for 2025 planning I think the fund you're referring to is SPAXX which is the Fidelity default for cash management, if you have a lot in that position and looking to optimize state exemption on the US Gov component, consider using a different fund like FDLXX which is 97% US Gov.  But you have to make explicit buys and sells in and out of that fund, whereas your cash position in SPAXX is automatic.

[DaveF1006]

If you report q foreign tax paid in Box 7 of your 1099 DIV, you will be asked a follow-up question about what amount of your dividend reported is a foreign dividend. Since the US percentage is 55.8% your foreign dividend amount is 44.2%. 

Then it will ask you to report what amount is the foreign dividend of the total dividend reported. You would multiply  the amount of Box 1A of the 1099 DIV by 44.2% to report the amount of foreign dividends paid. The amount is necessary to determine the amount of the foreign tax credit you are allowed to claim for this year.

[baldietax]

that's not correct - foreign dividend %s cannot be derived from US Gov obligations %, they have nothing to do with each other.  This needs to come from the fund reporting the foreign tax.

[DaveF1006]

 It depends. This question will appear under uncommon situations where it asks if a portion of these dividends are US Government Interest? You will check this Box and then the next screen will ask for the amount of US Government interest. See the two screenshot below that illustrate this feature.

To report this amount you would take the total dividends reported in Box 1a of your 1099 DIV and multiply it by .5508.  For example, if you received $1,000 in total dividends from the "Fidelity GOVT MMKT" fund, you would calculate the US government interest as  $1,000×0.5508=$550.80.  This get reported as $550.80 as US government interest.

[Yuppieswewe]

What about the Fed Home Loan %? Does it need to be deducted as well?

thanks!

[DaveF1006]

Yes, but only if these are backed by  government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. 

FHA

[baldietax]

Generally, FHLB is state tax exempt (but generally not Fannie and Freddie).  Ultimately @Yuppieswewe you should check your state tax code they usually have a schedule of what investments are state tax exempt, tho FHLB is very likely exempt.

Footnote From the Vanguard tax info

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

"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."

[Yuppieswewe]

ok so should I sum the 2 % together?

[baldietax]

yes it's reported as 0.72% in the pdf linked above which corresponds to the sum of these two components you found elsewhere