The portion of tax exempt dividends that are taxable in New York is not carried from the federal return to NY IT-201 line 20

[highschoolhank]

I have exempt interest dividends that are partially taxable in NY.  I entered them when working on my federal return and when prompted I specified the amount exempt for NY and the remainder as exempt from multiple states (ie. taxable in NY).   This should have resulted in IT-201 line 20 being updated with the non-NY exempt amount but it did not.  

[AmyC]

I would like to take a deeper look at this. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

TurboTax Online:

1. Sign into your online account.
2. Locate the Tax Tools on the left-hand side of the screen.
3. A drop-down will appear. Select Tools
4. On the pop-up screen, click on “Share my file with agent.”
5. This will generate a message that a diagnostic file gets sanitized and transmitted to us.
6. Please provide the Token Number that was generated in the response.

TurboTax Desktop/Download Versions:

1. Open your return.
2. Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent” *
3. This will generate a message that a diagnostic copy will be created.  Click on OK and the tax file will be sanitized and transmitted to us.
4. Please provide the Token Number (including the dash) that was generated in the response.

*(If using a MAC, go to the menu at the top of the screen, select Help, then, “Send Tax File to Agent”)

[highschoolhank]

Do you want the token here or in a reply to the email I received?

[highschoolhank]

Token:331634175-66776487

[highschoolhank]

Is there an update on this?  I have an underpayment penalty so want to file ASAP and this is holding me up.

I think the problem lies in Sch B. 

Looking at my 2023 Sch. B  Dividend Smart Worksheet the state ID for the exempt dividends is XX whereas in my 2024 form it is NY.  For both years the 1099DIV  has the exempt amount correctly split up between NY and XX.  The state ID in Sch. B cannot be altered.

Maybe I did something to cause this but I do not know what since the 1099DIV shows the exempt amount correctly split.

How do I get past this?

[Vanessa A]

Looking at your diagnostic copy, it appears as though you are correct that it has to do with how the entries are made and the state ID.  Are you using the online version or the desktop version?  


 

[highschoolhank]

Desktop version.

[Vanessa A]

The only thing that would be taxable to NY that is not to federal would be box 8 of the interest smart worksheet or box 12 of the smart interest worksheet  on Schedule B.  You can scroll on the side of the box of the smart worksheet and see the amounts that are tax exempt on your federal return.  There you can change the state ID.

The other place you can change the state ID is on the 1099 DIV and 1099-INT themselves.  If box 8 on the 1099 INT or box 12 on the 1099 DIV have NY as the state ID it leaves your taxable income for NY.  If it has any state other than NY than it is added to line 20 on the NY IT-201.  If you make the changes in the box you will see the tax due changes right away and then if you go to the IT-201 line 20 that line will be changed as well. 

[highschoolhank · Accepted solution]

Vanessa, thanks for the update.  I believe I have found the problem but do not understand why it occurred.

In the 1099-DIV Box 12 section (Exempt-interest dividends) at the bottom there is an entry for "where the dividends were earned".  For 2024 that box was NY whereas in prior years it was XX.  I changed it to XX which caused the state ID in the relevant entry of the Sch. B  Dividend Income Smart Worksheet to change from NY to XX and the NY IT-201 line 20 to be correctly updated.

Do you have any idea where that "where the dividends were earned" data comes from?  

[Vanessa A]

Did you import or did you manually enter the information?

 

[highschoolhank]

Imported.