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Tax exempt dividends are not included in your Adjusted Gross Income or your taxable income. However, it may come into play in the calculation of tax on Social Security, Alternative Minimum Tax and Medicare Premiums.
The 2019 Income Summary for 1099-DIV is misleading and I hope that Intuit is able to modify TurboTax to reduce confusion. This is the issue -- I imported my 1099-DIV from Fidelity which includes both tax-exempt dividends and ordinary dividends. The Income Summary displays the sum of these two on the line "Dividends on 1099-DIV", yet when I left click on the displayed amount, I get a pop-up message stating "Here is the dividend income you entered so far" and it shows ONLY the ordinary income. Thus, there is a disconnect between the displayed dividend amount and the pop-up message. It would be clearer if the pop-up message said "You've entered xxx amount of ordinary dividends and yyy amount of tax-exempt dividends for a total of zzz."
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