How does one handle the Box 8 amount earned on Treasury Bonds which should be excluded from state taxes?
There does not appear to be a place in TT to indicate that this amount was earned on Government securities. in contrast, Dividends on the same Bonds (1099-DIV, Box1) have an option to spec that they are earned on Government bonds.
Similarly, is there a way to indicate that capital gains are earned on Government securities, which are also supposed to be free from state taxes?
Any help will be greatly appreciated.
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Yes, when entering your 1099-INT in TurboTax:
TurboTax doesn't have a clear way to show that capital gains are from Treasury Bonds. Check if your state allows a specific adjustment for capital gains from U.S. Government securities. If so, you may need to manually enter this adjustment on the relevant state form depending on the state where you live.
Thank you DaveF1006,
The capital gains issue has been resolved, at least for NJ return. Under Adjustments, eventually TT will ask if there are any "Disposition of Property" not subject to NJ taxes. Click YES, and then check all the boxes (under "Omit") corresponding to Treasury obligations in the next screen. These will be excluded from NJ income.
However, my original question was solely in regard to 1099-MISC Box 8 - Substitute Payment in Lieu of Dividends.
Where on NJ return can you indicate that these particular payments are from Treasury bonds?
Thank you.
On the back of your 1099-MISC you are instructed where to report this income, which does not indicate it would be tax free on your New Jersey (NJ) return. If necessary you should check further with the payer of the income to determine if any of it should be tax free.
If it is dividends, then it may be added to the cost basis of the security which will reduce gain or increase loss at the time of redemption. This may be why it's taxable income now.
Other Miscellaneous Income:
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