Question

How to Treat Tax-Exempt Dividends from US Gov Securities for CA Taxes?

Forum|Forum|1 year ago
February 25, 2025
1 reply
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My mutual fund declared .30% of the reported dividends were from US Government Securities. In the California Tax Exempt Interest and Dividend section, I answered Yes to the question "Are any of the US obligations exempt-dividends from funds with less than 50% of their assets invested in California and US obligations?"

How do I treat the subsequent question of "Enter Less than 50% Exempt-Interest Dividends"?

DawnC

When entering the dividends on the federal return, you can select Multiple States from the dropdown if you:

Live in a state with no income tax (AK, FL, NV, SD, TN, TX, WA, WY)
Live where exempt-interest dividends from other states aren't taxed (DC, IN)
Have only a small amount of exempt-interest dividends and aren't concerned with extra state tax
- Your resident state will tax these dividends or interest if you don't live in an area listed above.

If a mutual fund has less than 50% California tax free obligations none of the interest is exempt. If more than 50% then that percent is tax exempt. If an individual bond is not a California tax free investment none of the interest is tax exempt.

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