The portion of tax exempt dividends that are taxable in New York is not carried from the federal return to NY IT-201 line 20

Forum|Forum|1 year ago
March 7, 2025
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I have exempt interest dividends that are partially taxable in NY. I entered them when working on my federal return and when prompted I specified the amount exempt for NY and the remainder as exempt from multiple states (ie. taxable in NY). This should have resulted in IT-201 line 20 being updated with the non-NY exempt amount but it did not.

Best answer by highschoolhank

The only thing that would be taxable to NY that is not to federal would be box 8 of the interest smart worksheet or box 12 of the smart interest worksheet on Schedule B. You can scroll on the side of the box of the smart worksheet and see the amounts that are tax exempt on your federal return. There you can change the state ID.

The other place you can change the state ID is on the 1099 DIV and 1099-INT themselves. If box 8 on the 1099 INT or box 12 on the 1099 DIV have NY as the state ID it leaves your taxable income for NY. If it has any state other than NY than it is added to line 20 on the NY IT-201. If you make the changes in the box you will see the tax due changes right away and then if you go to the IT-201 line 20 that line will be changed as well.

Vanessa, thanks for the update. I believe I have found the problem but do not understand why it occurred.

In the 1099-DIV Box 12 section (Exempt-interest dividends) at the bottom there is an entry for "where the dividends were earned". For 2024 that box was NY whereas in prior years it was XX. I changed it to XX which caused the state ID in the relevant entry of the Sch. B Dividend Income Smart Worksheet to change from NY to XX and the NY IT-201 line 20 to be correctly updated.

Do you have any idea where that "where the dividends were earned" data comes from?

AmyC

Employee

I would like to take a deeper look at this. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

TurboTax Online:

Sign into your online account.
Locate the Tax Tools on the left-hand side of the screen.
A drop-down will appear. Select Tools
On the pop-up screen, click on “Share my file with agent.”
This will generate a message that a diagnostic file gets sanitized and transmitted to us.
Please provide the Token Number that was generated in the response.

TurboTax Desktop/Download Versions:

Open your return.
Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent” *
This will generate a message that a diagnostic copy will be created. Click on OK and the tax file will be sanitized and transmitted to us.
Please provide the Token Number (including the dash) that was generated in the response.

*(If using a MAC, go to the menu at the top of the screen, select Help, then, “Send Tax File to Agent”)

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

highschoolhankAuthor

Do you want the token here or in a reply to the email I received?

highschoolhankAuthor

Token:331634175-66776487

williasp

I had the same issue for MA return. The portion of exempt and non-exempt dividends did not carry over from Fed to MA.

During the Fed process, I indicated in the 1099 Div section that one portion $EEE was from MA (i.e., MA exempt) and another portion $NNN was from multiple states (code XX, and therefor taxable in MA). However, the MA return did not show the breakdown.

Apparently, the error can be seen in the forms view. You open the 1099Div form, then scroll down to box 12. The two entries show up on different lines: MA=$BBB and XX=$NNN. That's just as it was entered. So far so good. However, the last line of box 12 asks where the divs were earned. It shows MA, but that is incorrect. You need to change the entry to XX (multiple states). Doing so will then correct the amount that is excludable (exempt) from MA taxes.

This is an error that needs to be corrected by TT.

highschoolhankAuthor

I too think it is a TT error. In my post about finding the box 12 problem I asked where that info came from but no TT person has responded. I will be watching out for it when doing 2025 taxes.