VMFXX (Government Obligations) and 2023 Taxes

[Midpack]

From Bogleheads. Thought this might interest some here, a state tax reduction that I would have overlooked (saves me $243). The Vanguard consolidated 1099 shows % govt obligations for funds excluding MMs, which is why I would have missed it. Turns out this discussion has occurred about this time of year before. Caution: the rules are different for some states like CA, NY and CT - check your state specifics before proceeding.

Hi all.

The consolidated 1099s I received from Vanguard has the government obligations and state tax information at the end for any mutual funds which the account owned and paid out income. This is lovely and makes sense and makes my life a bit easier.

Oddly, the 1099s do not include the government obligation information for VMFXX even though the "government obligations document" at https://investor.vanguard.com/content/dam/retail/publicsite/en/documents/taxes/usgoin-2024.pdf lists VMFXX at 49.37%.

There is a footnote that says that it only applies to the settlement fund, but in the cases I'm interested in that footnote does apply.

I believe this oddity existed in 2022 as well and was pointed out by someone here. [true]

Does anyone know why this oddity exists? I did note that the VMFXX ticker symbol is absent in the transaction detail where others are listed (VTSAX, etc.)

Can anyone clarify whether or not we are able to enter a subtraction for 49.37% of the VMFXX income on our state income tax return for 2023? It seems we can, but I'd appreciate confirmation.

https://www.bogleheads.org/forum/viewtopic.php?t=422538

 

[Stwicky]

Thanks for pointing this out. Saved me a little bit.

 

[Sunset]

Thanks.....

The direct URL is: https://investor.vanguard.com/content/dam/retail/publicsite/en/documents/taxes/usgoin-2024.pdf

 

[Midpack]

Thanks.....

The direct URL is: https://investor.vanguard.com/content/dam/retail/publicsite/en/documents/taxes/usgoin-2024.pdf

Thanks, I edited the OP with this. Not sure how it got lost in cut-n-paste.

 

[SloHan]

Thanks for posting. I could end up paying less to State taxes.

 

[mageedge]

Note, as Midpack pointed out, this reduction is not available in California (plus a couple of others).
If the relevant % is less than 50% in any of the 4 quarters of the tax year then none of the dividend can be deducted from state return.
Not a big deal for the past few years of minimal returns but worth thinking about now if you tend to keep significant amounts in the settlement fund. Transfer to Treasury Money Market (VUSXX) or similar to get state deduction.