Vanguard sent me a flyer "U.S. government obligations information" that contains the percentages of income from certain mutual funds that are from federal bonds, etc. For example, their Federal Money Market Fund and their Prime Money Market Funds have income from federal bonds. The flyer states that this income is usually EXEMPT from taxation in most states.
Yeah! That is great news!
However, where do I enter this into Turbotax (desktop DVD version)?
If it matters, I'm in California.
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@Radtree wrote:However, where do I enter this into Turbotax (desktop DVD version)?
You would start in the Income section of TurboTax (that varies slightly depending on your exact version). Click the Start (or Update) button to the right of Dividends on 1099-DIV, enter the figures, ensure that you check the box next to A portion of these dividends are U.S. Government interest, and then enter the amount of U.S. Government interest (see screenshots).
The U.S. Government interest amount should be transferred to the adjustments section of your California income tax return. Note that the fund must have at least 50% of its assets invested in tax-exempt U.S. obligations and/or in California or its municipal obligations to qualify. See page 41 --> https://www.ftb.ca.gov/forms/2018/18_540bk.pdf\
@Radtree wrote:However, where do I enter this into Turbotax (desktop DVD version)?
You would start in the Income section of TurboTax (that varies slightly depending on your exact version). Click the Start (or Update) button to the right of Dividends on 1099-DIV, enter the figures, ensure that you check the box next to A portion of these dividends are U.S. Government interest, and then enter the amount of U.S. Government interest (see screenshots).
The U.S. Government interest amount should be transferred to the adjustments section of your California income tax return. Note that the fund must have at least 50% of its assets invested in tax-exempt U.S. obligations and/or in California or its municipal obligations to qualify. See page 41 --> https://www.ftb.ca.gov/forms/2018/18_540bk.pdf\
I live in North Carolina and I have a feeling that mutual fund dividends from government obligations are not exempt in North Carolina . Is that right?
I know interest from government obligations are but I have a feeling mutual fund govt obligations dividends are not though in most state they are
Can someone verify this
You may have to do some research to determine what is being reported on your 1099 form. US government securities do not pay dividends, they only pay interest. So, normally income from investments in mutual funds that hold US government securities would be interest income and exempt from taxation in North Carolina.
However, your mutual fund may report gains and losses on the sale of US government securities, and those gains or losses would be taxable or deductible as capital gains.
I assume the "dividends" you are referring to is actually interest income, but you would have to verify that with your broker.
Any idea where this option is now with today's (Feb 2024) online version? No extra options are presented when entering 1099-DIV income.
Box 12 Bond premium on US obligations.
When you go into Interest income to enter the amount, there will be a box that shows My form has information in more than just one box. Check it off. Then in box 12 you will hit Bond premium on treasury obligations.
then
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