Bond Fund and Money Market Fund Tax Treatment Question

[terminator]

I've never owned a bond fund before, so I was wondering for tax purposes do they break out the percentage of income that comes from government instruments on your 1099 so it can be excluded for state tax purposes? I was wondering the same thing for money market funds. (I'd always had "bank money market accounts" before.) I'm holding a Fidelity money market (FSLXX) and bond fund (FBIDX) if that matters. The prospectus and other information on the Fidelity site didn't seem to give this information, but I figured someone here would know offhand. Thanks.

 

[tomz]

When I get the 1099 for Vanguard funds or money markets, I get a little brochure that shows, by fund, what % of income comes from US Government Obligations with another column that has % of Assets invested in US Gov't Obligations.

 

[JohnEyles]

When I get the 1099 for Vanguard funds or money markets, I get a little brochure that shows, by fund, what % of income comes from US Government Obligations with another column that has % of Assets invested in US Gov't Obligations.

Unfortunately, for stuff in a general brokerage account (e.g. SchwabOne), you kinda
have to track down all the US Gov't percentages yourself, by taking a tour of the
various fund company's webpages. It's a good way to find out whose webpage
sucks and whose is good ! Barely worth the trouble, since it's typically a pretty
small percentage for all but bond funds with heavy Treasury exposure, and then
your actual dollar savings is that percentage of your dividends multiplied by your
state's marginal rate. And of course you have to figure out whether or not your
state allows/disallows "indirect" US Gov't obligations. All part of tax-season madness !

 

[d]

yup, a real p.i.t.a., and while i'm sure it's not worth it, i track every penny ... damned if i'll pay any more in taxes than is required.

 

[terminator]

Thanks. I'm in Ohio, so I think it's worth keeping an eye on since the marginal state rate for most people is about 5% (and goes up to 7% or so). Luckily I don't need to worry about this until 2008 since I didn't buy the fund until 2007. I'm just trying to eyeball it and plan ahead. I think the fund is 70% is government issues (it lists it as 70% government quality issues) although a lot of that is agencies rather than T-notes. I guess I'll have to find out next year whether those indirect agency obligations can be excluded as income in OH.

Thanks again for the help.