Question

% of US government interest calculation from 1099-DIV

Forum|Forum|1 year ago
February 28, 2025
4 replies
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How can I calculate the % of US government interest on an investment dividend?

I know for example that for "fidelity GOVT MMKT" it was 55.08% in 2024.

What do I apply this % to?

I have these columns in the detailed tax report from the brokerage:

- ordinary dividends

- qualified dividends

- federal income tax withheld

- section 199A dividends

- foreign tax paid

-capital gain distributions

-foreign source income

- qualified foreign source income

thanks!

Tax Advice

baldietax

in the details of the 1099 you need to find the amount of dividends included in Box 1a that were paid by that fund, and multiply that amount by that % to get the $ amount to input for the US Gov Obligations

baldietax

Also, this doc from Fidelity explains the % multiplication on first page so you have something official on it

https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/taxes/TY24GSESupplementalLetter.pdf

Btw for 2025 planning I think the fund you're referring to is SPAXX which is the Fidelity default for cash management, if you have a lot in that position and looking to optimize state exemption on the US Gov component, consider using a different fund like FDLXX which is 97% US Gov. But you have to make explicit buys and sells in and out of that fund, whereas your cash position in SPAXX is automatic.

DaveF1006

If you report q foreign tax paid in Box 7 of your 1099 DIV, you will be asked a follow-up question about what amount of your dividend reported is a foreign dividend. Since the US percentage is 55.8% your foreign dividend amount is 44.2%.

Then it will ask you to report what amount is the foreign dividend of the total dividend reported. You would multiply the amount of Box 1A of the 1099 DIV by 44.2% to report the amount of foreign dividends paid. The amount is necessary to determine the amount of the foreign tax credit you are allowed to claim for this year.

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baldietax

that's not correct - foreign dividend %s cannot be derived from US Gov obligations %, they have nothing to do with each other. This needs to come from the fund reporting the foreign tax.

DaveF1006

It depends. This question will appear under uncommon situations where it asks if a portion of these dividends are US Government Interest? You will check this Box and then the next screen will ask for the amount of US Government interest. See the two screenshot below that illustrate this feature.

To report this amount you would take the total dividends reported in Box 1a of your 1099 DIV and multiply it by .5508. For example, if you received $1,000 in total dividends from the "Fidelity GOVT MMKT" fund, you would calculate the US government interest as $1,000×0.5508=$550.80. This get reported as $550.80 as US government interest.