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March 30, 2024
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Calculating amount for CA less than 50% tax exempt

  • March 30, 2024
  • 2 replies
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I live in California. This year I received tax-exempt interest from a variety of municipal bonds. My CA tax form is asking me how much of this interest is from "funds with less than 50% of their assets invested in California and US obligations".

 

Here's the info on my tax-exempt interest from my brokerage's 1099-INT:

State of residence (CA)

  • Tax-exempt interest: 950
  • Accrued interest paid -44
  • Bond premium- covered lot -461

Other states

  • Tax-exempt interest 6299
  • Accrued interest paid -2341
  • Bond premium- covered lot -1678

 

Two questions:

 

1) Is the proper amount to report on my CA tax form as "less than 50% tax exempt interest" 4,621 (6299 minus 1678)?

 

2) Does it matter that these are individual bonds instead of "funds"?

    Best answer by octern

    I figured it out. The line I referred to (Line C) should only have interest from mutual funds. The place I was looking for to enter other CA-taxable interest from muni bonds is actually Line E. Then you add C+E to get the total amount of CA-taxable interest.

    2 replies

    Employee
    March 30, 2024

    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. 

    octernAuthorAnswer
    March 30, 2024

    I figured it out. The line I referred to (Line C) should only have interest from mutual funds. The place I was looking for to enter other CA-taxable interest from muni bonds is actually Line E. Then you add C+E to get the total amount of CA-taxable interest.