TurboTax only imports Illinois state exempt interest from Federal and it appears to be a non-editable amount. How do I enter the adjustment for dividends from Treasuries?

Forum|Forum|6 years ago
June 5, 2019
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I receive dividends from mutual funds that invest in Treasuries and TIPS that should be partially tax free in my state (IL). I can't figure out how to enter that adjustment in my Illinois return. (It should go on Schedule M, Line 22.) TurboTax only imports state exempt interest from Federal and it appears to be a non-editable amount. How do I enter the adjustment?

TurboTax Business Windows

Best answer by SteamTrain

Edit your 1099-DIV form again.....back in the Federal section

On a page after that 1099-DIV main page, there is a page with check boxes....you need to check the one:

"A portion of these dividends is U.S.Government interest"

Then continue to the next page where you indicate the $$ amount that was from US Bonds....you have to calculate that $$ amount from whatever data the Mutual Fund provided to you. That's how the proper amount is determined for transfer to be included on line 22 of the IL Sched M (along with any other values, like from box 3 on a 1099-INT...if any)

SteamTrainAnswer

Employee

Edit your 1099-DIV form again.....back in the Federal section

On a page after that 1099-DIV main page, there is a page with check boxes....you need to check the one:

"A portion of these dividends is U.S.Government interest"

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

SteamTrain

Employee

Note: You should not attempt to break out IL dividends form box 11 on the 1099-DIV form. IL does not allow you to exempt IL dividend interest from your indirect IL holdings in a Mutual fund.

" However, income from these obligations is not exempt if you own them indirectly through owning shares in a mutual fund. "

Instrucitosn for line 34, page 4 of: <a rel="nofollow" target="_blank" href="https://www2.illinois.gov/rev/forms/incometax/Documents/currentyear/individual/il-1040-schedule-m-instr.pdf">https://www2.illinois.gov/rev/forms/incometax/Documents/currentyear/individual/il-1040-schedule-m-instr.pdf</a>
_________________________________________
You "can" and should break out IL & US Territory interest for any box 8 entries on a 1099-INT form...those are for actual bonds that you may own....if any are IL bonds (or US Territories, Puerto Rico, Guam..etc).

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

silver-street

I just looked in the Schedule M instructions and Pub 101 and there is no longer the "however...' - so the IL % should be deducted (that is how I read this):

From Pub 101:

"What if I have distributions from money market trusts (mutual funds)?
If you have distributions from money market trusts (even if
the obligations are owned indirectly through owning shares
in a mutual fund), you may subtract that portion of income
received from any of the obligations that are listed in this
publication under “What if I have income from obligations
of the United States Government?” and “What income is
exempt from Illinois Income Tax by other federal statutes?”
Your distribution is exempt from Illinois Income Tax if the fund invests
exclusively in these state tax exempt obligations. The entire
amount of the distribution (income) from the fund may be subtracted.
in both exempt and nonexempt obligations. The amount
represented by the percentage of the distribution that the
mutual fund identifies as exempt may be subtracted.
in those obligations listed even if the fund does not identify
an exempt amount or percentage. You may figure your
subtraction by using a fraction. Use the amount invested by
the fund in state-exempt U.S. obligations as the numerator.
Use the fund’s total investment as the denominator. Multiply
the total distribution by the fraction.
Use the year-end amounts to figure the fraction
if the percentage ratio has remained constant throughout
the year. If the percentage ratio has not remained constant,
take the average of the ratios from the fund’s quarterly
financial reports."

Golda1

I have US savings bond interest on my 2023 Federal Return. This is not taxable in Illinois. How do I make this adjustment on my IL return?

DaveF1006

If you reported savings Bond interest in Box 3 of the 1099 INT in the federal return, Turbo Tax will automatically subtract this amount in your Illinois State return. You will receive this type of a message in your Illinois State return as you prepare it.