1099-DIV interest from federal bonds, not taxable by CA, how can I tell which entries?

[untuit]

Tax year 2022 we held US government bonds with Schwab, and maybe Fidelity. ttax wants to know about this via the checkbox "a portion of these dividends is US Government interest". CA does not tax any interest on those earnings.

What I'm not sure of is how to distinguish the correct entries on the Schwab and Fidelity tax forms.

With Schwab some seem obvious (dollar values are made up):

Section labeled: Interest on US Savings Bonds and Treasure Obligations

US TREASU NT 2.125% 12XXX has Paid in 2022 $0, paid adjusted in 2023 for 2022 $1200.00, Amount $1200

US TREASURY BILXXX has Paid in 2022 $20.00, paid adjusted in 2023 for 2022 $0, Amount $20

US TREASURY BILXXX has Paid in 2022 $300.00, paid adjusted in 2023 for 2022 $0, Amount $300

and a total amount of $1520 at the bottom of that section.

There is also a section labeled Accrued Interest Paid on Purchases which has some small negative amounts, including one labeled US TREASU NT.

There is also a Realized Gain or Loss section that has as US TREASU NT entry

On the Fidelity statement is different, while the 1099-INT section has US Treasury Obligations the only USgovt looking entry in 1099-DIV is Fidelity Government Money Market SPAXX31617H102.

What do I sum up for each brokerage for "a portion of these dividends is US Government interest"?

[SteamTrain]

Don't know about Schwab...that sounds like a 1099-INT there...but I have no idea what the $$ amounts represent...confusing

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But...Fidelity, for the 1099-DIV.

You check the link for "Percentage of Income from US Government securities" here:

Fidelity Mutual Fund Tax Information - Fidelity

That gets you to a PDF file form Fidelity, you find the Fidelity listing for the "Fidelity Government Money Market Fund on page 4...and find that fund had 30.59% of its $$ distributed from US Govt bonds.

Normally you'd multiply that % by the portion of the box 1a $$ that was distributed by that fund during the year...BUUUUT...there is an asterisk "*" next to that fund's name that tells you that you cannot do that, for that particular fund, if you are a resident of CA, CT, or NY.

Thus, as a resident of CA you won't enter anything on the follow-up page on that 1099-DIV to indicate that any $$ came for US Govt bonds.

___
WHY???

CA, CT and NY have a restrictions, sating you cannot break out the US GOvt amounts on a Mutual Bond fund/1099-DIV unless the fund held 50% or more of its assets in US Govt securities.....and the "*" on the Fidelity listing indicates that fund does not comply.

________

[untuit]

SteamTrain, you're a lifesaver, thank you.

I realize now that the schwab numbers I relayed in the original post were not in the Form 1099 composite section. Instead they're in the Year End Summary section which is marked as not reported to IRS. So maybe those numbers need to be ignored.

In the composite 1099 section there is 1099-INT entry for box 3, Interest on US Savings Bonds and Treasury Obligations, and I've plugged that in to ttax. In the 1099-DIV section, I've entered the values for boxes 1a and 1b, total ordinary and qualified dividends.

But I'm still not sure what if anything I need to do for the 1099-DIV question in ttax that asks if a portion of these divs are US Govt interest. The 1099-DIV section doesn't have a listing related to US bonds like the INT and -b 1099 forms do.

I guess one question is, if I fill out the INT DIV and B sections, between ttax and IRS, do they understand what is state taxable and what is not? I don't think so, else they wouldn't be asking the question "is a portion of these dividends from US Govt bond interest". So not sure what to do with Schwab.

Re Fidelity, per your note, it seems that that fund would be taxed by CA after all so nothing to do there.

[SteamTrain]

For the box 1a on the Schwab 1099-DIV form, you'd need to find a similar listing from Schwab...if not, you would not indicate any came from US Govt bonds....and it's all CA-taxable.  or talk to a Schwab rep and find out where their listing is.....but if you didn't hold any mutual funds at Schwab (or ETF's) that invested in mostly US Govt bonds, you wouldn't have anything there to report as US Govt $$ either.

[MarilynG1]

Some brokerages do a much better job than others in reporting this type of (breakdown) information to their customers.  Since it's not a requirement under law, some financial institutions take the trouble to help and put in the extra work, and others do not.

Here's more info on Form 1099-Div and details about US Govt. Interest on 1099-Div to help you.  

If your investment makes a reportable capital gain distribution to you, it will be reported in box 2a. 

The negative amounts in Accrued Interest Paid represent amounts the bondholder received, but that you only received a portion of.  You should receive a 1099-Int when you need to report interest paid to you. 

@untuit 

[untuit]

SteamTrain, box 1a on the schwab 1099-div does have a value and I've plugged it in.

I guess I do need to talk with Schwab to be sure.

[untuit]

Thanks Marilyn

2a doesn't have a value.

I guess I'm still puzzled by how one is supposed to suss out what might need to be entered for that question "a portion of these dividends is US Government interest".

[SteamTrain]

@untuit   A value in box 1a doesn't mean that any of it is US Govt bond interest....it could all be from stocks or Mutual fund stock dividends.....you'd have to get the exact amounts and calculate it yourself.  And unless you held a fund at Schwab, that invested mostly in US Govt bonds, you couldn't use that follow-up page about US Govt bond $$ at all (since you are a CA resident).

[untuit]

steamtrain, I only meant that I'd entered th 1a value from the statement into the 1a box in ttax, not that I'd used it for any adjustment for interest not taxable by CA. I will be talking to Schwab on monday to get this right.

[untuit]

I think maybe this is clear, but I'll write it out in case anyone has comments.

First I called Schwab and the person I talked to, who was in the client reporting section, supposed to know about this stuff, didn't know and didn't think Schwab could provide the answer.

What I just noticed is that the 1099-INT section has the us govt bond interest broken out in box 3, plain as day.

The 1099-DIV section has nothing like that...why? The year end summary section on the statement also lists that same us bond interest under the same category, interest on us savings bonds. Dividends...no idea how or if they are state tax exempt. If 1099-INT is laid out plain and simple, had can I tell if 1099-DIV needs anything?

I am curious, I chose to enter the 1099 info summarized. I wonder if I'd chosen to enter all by hand, and filled it all out correctly, maybe ttax wouldn't even need to ask me a separate question re are any of the interest earnings exempt from state taxes? Or if the import feature worked at all, which it doesn't for me.

[untuit]

Oh, according to my spouse, who does the trading, we just don't see dividends on bonds like these. So nothing to do re exempt from state taxes on the 1099-div.

Sorry for burning up half of the internet's bandwidth on this tail-chasing.