Are capital gains on 1099-DIV from U.S. obligations subject to Maryland income tax?

Forum|Forum|6 years ago
June 7, 2019
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TurboTax Deluxe Windows

Best answer by CherylW

No, they are not.

This, from the MD 2017 State & Local Tax Forms & Instructions, Subtractions:

ab. Income from U.S. Government obligations. Enter interest on U.S. Savings Bonds and other U.S. obligations. Capital gains from the sale or exchange of U.S. obligations should be included on this line. Dividends from mutual funds that invest in U.S. Government obligations also are exempt from state taxation. However, only that portion of the dividends attributable to interest or capital gain from U.S. Government obligations can be subtracted.

CherylWAnswer

Employee

No, they are not.

This, from the MD 2017 State & Local Tax Forms & Instructions, Subtractions:

krelged

Employee

I understand this but Turbo Tax only asks if any capital gains are from US obligations, not dividends. This appears to be a mistake. Please help me understand!

CherylW

Employee

If you have MD capital gains that are tax free, enter them on this screen (see below):

CherylW

Employee

When you're in the Dividend section, after you enter them, you see the screen below. On the next screen, you can enter the portion that's US Government obligations.

The next screen asks you the state that it's from.