How many miss reducing state taxable income by US Govt interest?

[Philliefan33]

Because of the training I’ve received as an AARP Tax Aide, I know to look for it. But most of the time the effect is negligible for the funds I hold. For example, $2000 worth of dividends that is 3% non-taxable in PA reduces my state tax bill by $2. Hardly worth doing, except for the practice.

 

[Midpack]

TT didn’t miss it on my NC return, handled correctly though it did not show its work. I would have known anyway because the spreadsheet I use to estimate my quarterly Fed & State payments credits interest from government obligations correctly, from T-Bills in 2022. I would have noticed the discrepancy and found it. I have been hand calculating the government interest from all my MFs for years, even though it doesn’t amount to much.

 

[RunningBum]

I'm not talking about TT missing it, but you have to enter the data for TT to include it. I think it's easy for users to miss checking the box that tells them to enter it. There's nothing on the 1099-DIV to tell TT to handle it, and they aren't going to pull a number out of the air.

 

[Which Roger]

For fidelity, I used this. It gets issued every year.

https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/taxes/GSE-Supplemental-Letter.pdf

Thanks for sharing. I own a couple of the index funds on this list. One is 0.04% tax exempt and the other is 0.01%. I guess I won't be missing much by not doing the extra math.

 

[Sunset]

OP - Thanks for the reminder..

I am doing our taxes and had this nagging thought of what was missing, and this was it. We didn't get any of those separate papers this year detailing the %. I'll need to take a second look

 

[jebmke]

My H&R Block software specifically prompts for this. I never miss it.

 

[Sojourner]

My H&R Block software specifically prompts for this. I never miss it.

Same here, although I wouldn't call it a "prompt" exactly. It's a checkbox you have to notice and tick when you are entering dividend income. IME, takes maybe 20 minutes of extra effort each year to collect all the relevant info and do the percentage calculations, and typically reduces my state tax by about $30. Meh... not much money, but enough to pay for my H&RB tax software!

 

[MissMolly]

We use TurboTax that we download to our desktop computer. Everyone (I've been Googling this a lot this morning) refers to a checkbox on the page when entering 1099DIV info that says "A portion of these dividends are U.S. Government interest". I can see on my statements from Vanguard that we have this info on the Mutual Fund and UIT Supplemental Information but NOWHERE on TurboTax do I see a checkbox for "A portion of these dividends are U.S. Government interest" when entering the 1099DIV info. What am I missing? Can anyone help narrow this down for me?

 

[badatmath]

Mine was done and filed but if I do "edit", "continue", it is the first checkbox on the next page. TT desktop. "A portion of these dividends is US Gov interest".

My problem was not finding that it was waiting additional weeks for a booklet that is full of numbers for all funds that I didn't know what to do with.

 

[cathy63]

We use TurboTax that we download to our desktop computer. Everyone (I've been Googling this a lot this morning) refers to a checkbox on the page when entering 1099DIV info that says "A portion of these dividends are U.S. Government interest". I can see on my statements from Vanguard that we have this info on the Mutual Fund and UIT Supplemental Information but NOWHERE on TurboTax do I see a checkbox for "A portion of these dividends are U.S. Government interest" when entering the 1099DIV info. What am I missing? Can anyone help narrow this down for me?

Go to Wages & Income / Interest & Dividends / Dividends on 1099-DIV
Assuming you've already entered or downloaded them, click the Edit button next to one of your 1099-DIVs
Continue past the boxes for numeric entries
Continue past the FEIN
You should get to the attached screen. Check the first box.

 

[JoeWras]

Same here, although I wouldn't call it a "prompt" exactly. It's a checkbox you have to notice and tick when you are entering dividend income. IME, takes maybe 20 minutes of extra effort each year to collect all the relevant info and do the percentage calculations, and typically reduces my state tax by about $30. Meh... not much money, but enough to pay for my H&RB tax software!

Exactly! Every year we have 20 pages of complaints about not getting SW free from Fidelity, or saving $5 or $10 to hit the right day on Amazon. Hours are spent by all of us reading and participating.

It only takes a little effort to save more on actual taxes. With the rates now rising, it will start to be more significant.

 

[MissMolly]

Go to Wages & Income / Interest & Dividends / Dividends on 1099-DIV
Assuming you've already entered or downloaded them, click the Edit button next to one of your 1099-DIVs
Continue past the boxes for numeric entries
Continue past the FEIN
You should get to the attached screen. Check the first box.

Thank you! Thank you! Thank you! Now we see it! We spent 3 hours looking for this. So frustrating.

 

[ERD50]

I think I forgot about this the last couple years. It's small, and not really worth the effort I guess, but I like to be complete.

Fidelity's doc is a little better than Vanguard's. They give an example of how to use it, and also include the fund symbols, which VG does not. It's almost as if VG is trying to disguise this. But really, IMO, the actual dollar amount of govt interest for your dividends should be included in the 1099-DIV. No manual calculation necessary, and no looking up the %s.

Yep, I'm so used to hitting CONTROL-F to FIND something in a document, and I was confused when these Vanguard funds/ETFs didn't show up. Oh, only the name of the fund? WTH?

I thought Fidelity was better (they are), but still no cigar. I searched for SPAXX, the Money Market Fund that holds my cash that I use to pay the Fidelity Credit Card each month. Well...

Fidelity® Government Money Market Fund - All Classes* Various 30.59%

Where I expect the fund ticker, they have 'various'.

Another reason I hate dividends in taxable accounts!

-ERD50

 

[jebmke]

Same here, although I wouldn't call it a "prompt" exactly. It's a checkbox you have to notice and tick when you are entering dividend income. IME, takes maybe 20 minutes of extra effort each year to collect all the relevant info and do the percentage calculations, and typically reduces my state tax by about $30. Meh... not much money, but enough to pay for my H&RB tax software!

Historically not much here either until 2022. I swapped all our munis to Treasuries so the state tax saving is substantial and will be even higher in 2023.

 

[Toocold]

Fidelity's doc is a little better than Vanguard's. They give an example of how to use it, and also include the fund symbols, which VG does not. It's almost as if VG is trying to disguise this. But really, IMO, the actual dollar amount of govt interest for your dividends should be included in the 1099-DIV. No manual calculation necessary, and no looking up the %s.

I completely agree. They offer other tax related supplementary information, and I don't understand why they don't do it for this.

 

[Toocold]

I would need to give that to my CPA in order for her to compute it correctly?

I would hope that your CPA has this information and is incorporating it to the tax forms.

If you want to check, you can look at your state tax forms to see if there were any adjustments made to your federal tax income. That's where mine is for the state I live in.

 

[Toocold]

Thank you! Thank you! Thank you! Now we see it! We spent 3 hours looking for this. So frustrating.

I am still confused why it's in 1099-Div and not 1099-Int, but I'll do whatever to reduce my taxes.

 

[jebmke]

I am still confused why it's in 1099-Div and not 1099-Int, but I'll do whatever to reduce my taxes.

Mutual Funds and ETFs report dividends regardless of what types of underlying assets they hold.

 

[rk911]

i did not read all 41-posts so apologies if this is duplicate information.

Vanguard publishes a list of their funds and the % of income in that fund that is generated from US Govt obligations. I used that each year when I had VG funds to determine what number to use when entering the 1099-DIV figures into TT after checking the box..."a portion of these dividends were from US Govt obligations" (or words to that effect).

The document is in their tax center and labeled Ty2021. Vanguard told me that the % figures rarely change.

 

[SecondCor521]

i did not read all 41-posts so apologies if this is duplicate information.

Vanguard publishes a list of their funds and the % of income in that fund that is generated from US Govt obligations. I used that each year when I had VG funds to determine what number to use when entering the 1099-DIV figures into TT after checking the box..."a portion of these dividends were from US Govt obligations" (or words to that effect).

The document is in their tax center and labeled Ty2021. Vanguard told me that the % figures rarely change.

Two things:

1. This year, Vanguard included the information in the supplemental section of the 1099-B (in addition to having the separate document). Oddly, they did not include VMFXX in the 1099-B, but it is in the separate document, so if you own that fund in a taxable account you'll need to know that.

2. The Vanguard rep's comment is misleading. The numbers can change from year to year; you should get the correct form for the applicable year when doing your taxes.

 

[marko]

Thanks. Made me look: T R Price does break it out by percentage on one of the 1099D reports. Small change for me but nice to keep an eye on.

Checked and my accountant apparently missed it in my 2021 filing.