Vanguard Intermediate Term Tax Exempt (VWITX)

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
User avatar
happysteward
Posts: 101
Joined: Tue Jun 16, 2015 11:42 am

Vanguard Intermediate Term Tax Exempt (VWITX)

Post by happysteward » Sun Mar 18, 2018 3:19 pm

This fund generates income from bonds in many US States. I own it in my taxable account (my marginal tax rate is 28%). I live in PA. My tax software asks me if I want to delineate how much income is from specific states or if I just want to say all the income is from “various states”- I.e no specific delineation.

What are the advantages for me to take the time and delineate how much income comes from each specific state? Thanks !
"How much money is enough?", John Rockefeller responded, "...just a little bit more." | "He who loves money will not be satisfied with money..." Ecclesiastes 5:10

User avatar
Rick Ferri
Posts: 8534
Joined: Mon Feb 26, 2007 11:40 am
Location: Georgetown, TX. Twitter: @Rick_Ferri
Contact:

Re: Vanguard Intermediate Term Tax Exempt (VWITX)

Post by Rick Ferri » Sun Mar 18, 2018 3:25 pm

Municipal bond interest from the state you live is generally state tax exempt (not in all states though). It will make no difference on your federal return.

Note: I am not a CPA and do not render tax advice. Check with your tax adviser.
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.

mhalley
Posts: 6064
Joined: Tue Nov 20, 2007 6:02 am

Re: Vanguard Intermediate Term Tax Exempt (VWITX)

Post by mhalley » Sun Mar 18, 2018 3:28 pm

I am no expert, but I imagine that would mean paying a little less in state taxes. You could state that 4.69% of the interest came from PA munis, and not have to pay state taxes on that portion of your interest income. Here is the PDF with funds and state percentages:
https://docs.google.com/viewer?url=http ... 012018.pdf

User avatar
GKSD
Posts: 254
Joined: Sat Mar 19, 2016 9:01 am

Re: Vanguard Intermediate Term Tax Exempt (VWITX)

Post by GKSD » Sun Mar 18, 2018 3:32 pm

The delineation might be helpful. Depending on the PA tax rules, the muni income generated by VWITX within PA might be tax-exempt from PA state tax. The muni income generated from other states is taxable for PA. But you might want to double check the PA state tax rules about this.

I briefly googled and found this info for PA: refer highlighted text - which seem to fit VWITX situation
Is income from a municipal bond fund taxable?
Income from a municipal bond fund that is invested solely in Pennsylvania municipal bonds is not taxable.

Income from a municipal bond fund that is invested in Pennsylvania and municipal bonds from other states is taxable for the portion that comes from other states. (The fund will provide the amount or percentage that is not taxable).

Income from municipal bond funds invested municipal bonds from other states is taxable.

The sale of an interest in a municipal bond fund is taxable whether the fund is invested Pennsylvania or other states municipal bonds.

Leesbro63
Posts: 5464
Joined: Mon Nov 08, 2010 4:36 pm

Re: Vanguard Intermediate Term Tax Exempt (VWITX)

Post by Leesbro63 » Sun Mar 18, 2018 3:33 pm

I'm in PA and have Vanguard Bond Funds. What you see, above, I believe to be correct. The PA portion of the fund income can be excluded from taxable PA income. Generally it's not a huge amount, as the PA portion of the fund is not great (under 5% this year, as posted). But, hey, why pay tax on income that you don't have to pay tax upon?

Dudley
Posts: 102
Joined: Tue May 09, 2017 5:34 am

Re: Vanguard Intermediate Term Tax Exempt (VWITX)

Post by Dudley » Sun Mar 18, 2018 4:06 pm

If Turbotax you just enter the amount for PA (your state) and then the remainder for "other states" (2 lines). Vanguard has a document giving the state allocation for all its tax free funds for each state. Your state tax section with then just use the "other states" amount. i.e. you don't pay state tax on the PA amount.

rkhusky
Posts: 5532
Joined: Thu Aug 18, 2011 8:09 pm

Re: Vanguard Intermediate Term Tax Exempt (VWITX)

Post by rkhusky » Mon Mar 19, 2018 8:13 am

You can also subtract off the percent for muni bonds of US territories.

Post Reply