Excluding U.S. obligations portion of Capital Gains from Maryland taxes

Forum|Forum|6 years ago
February 29, 2020
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I'm using TurboTax 2019 Premier desktop for Windows. In preparing my Maryland state return, I'm at the section entitled "Capital Gains From U.S. Obligations are Tax Free -- You can exclude capital gains from U.S. obligations because Maryland does not tax them. Enter any portion of your capital gains that came from U.S. obligations." It then lists my total capital gains (total of box 2a, total capital gain distribution, for all funds). Then there is a single box for entering "Total From U.S. Obligations." On my T. Rowe Price 1099-DIV, there is a table which lists interest on direct U.S. government securities. It has a column titled "% of dividends from U.S. government securities." But notice it says dividends. The instructions for that column say it's for computing the amount of DIVIDENDS that are U.S. government securities, and it's multiplied by box 1a which is total ordinary dividends, not capital gains. So I can't use that column for capital gains. The table also has a column titled "% of fund in U.S. government securities at December 31, 2019." But the instructions for that column say it's for computing an exemption from state intangible property tax, NOT for capital gains. So I can't use that column for capital gains. There doesn't seem to be a column for computing the exclusion of capital gains from U.S. obligations from state taxes.

Please note, this is NOT the same thing as when entering dividends for the federal return. This is for excluding the portion of Capital Gains attributable to U.S. obligations when entering info for my Maryland state return.

Can anyone tell me how I can compute the portion of capital gains from U.S. obligations? Thanks.

AmyC

Employee

Call T Rowe price. You are correct in all that you said. The investor knows the answer.

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ItzRavAuthor

Employee

Thanks for your response. I appreciate it. I did end up calling T. Rowe Price. And Vanguard (who we also have some funds with). And the support number for the office of the Maryland Comptroller. TRP gave me the story that if there were any portion of their capital gains distribution to me attributable to U.S. government obligations that they would have included a footnote to that effect under each fund that had any. I found that hard to believe, seeing as a number of my funds had dividends that did have a portion of such obligations, some significantly so. The dividends are coming from the same funds as the capital gains. It's just a pot of money. If the dividends have them, it only makes sense (to me) that the capital gains would have some too. Not zero. But not one of my funds had a footnote. At any rate, Vanguard's response made even less sense. Their answer was that it was too complicated for them to compute, that there were too many factors to consider, and so they don't provide that information. If that's the case, how can anyone ever fill in that line on the Maryland tax form, and why bother even having it? Lastly, the Maryland Comptroller's office said what I expected them to say, which was to contact the mutual fund companies. Which I told them I did and what their answers were. They were as perplexed as I was. Oh well, I can't just guess the number, so I'm leaving it blank and I'm moving on.