CO Tax: Figuring addback for Fido Gov MM SPAXX divs

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GreenGrowTheDollars
Posts: 434
Joined: Fri Dec 18, 2015 11:09 pm

CO Tax: Figuring addback for Fido Gov MM SPAXX divs

Post by GreenGrowTheDollars » Sun Apr 07, 2019 12:26 pm

Using Turbotax. Fed is a piece of cake. Colorado...not quite as easy. We have a bunch of dividends from Fidelity for SPAXX (Fidelity Government Money market). Colorado instructions say that certain sources of dividends are not Colorado tax-exempt even though they're federal:
TAXABLE OBLIGATIONS
Interest income from the following sources is not an allowable deduction (subtraction modifications) for Colorado
income tax purposes. They should not be entered as a subtraction from federal income on the Colorado 104 Form.
NOTE: This list is not necessarily complete, and should not be construed as such. An item is exempt only if it
appears on the exempt list.
1. Asian Development Bank
2. Federal Home Loan Mortgage Corporation
3. Federal National Mortgage Association
4. Government National Mortgage Association
5. Inter-American Development Bank
6. International Bank for Reconstruction and Redevelopment (World Bank)
7. Repurchase agreements
8. Federal Agency Bonds


I tried calling Fido, and the rep told me that SPAXX doesn't hold Fannie Mae or Ginnie Mae securities. Looking at the current holdings, that is not accurate. The Fido website shows me the percentage of current holdings (but not the percentage of dividends) from each source, but that does not help.
1. How do I figure out how much of my SPAXX dividends are from these disallowed sources? Is there an easy source?
2. Is it worth even trying to figure it out based on $3K of dividends?

TIA.

depressed
Posts: 149
Joined: Sun Oct 14, 2018 4:07 pm

Re: CO Tax: Figuring addback for Fido Gov MM SPAXX divs

Post by depressed » Sun Apr 07, 2019 12:45 pm

At the end of each year, Fidelity posts the percentage of each fund's income that is from U.S. Government Securities. For FIdelity Government Money Market in 2018, that percentage was 56.16%, as shown here:

https://www.fidelity.com/bin-public/060 ... 18-gse.pdf

I wonder why the Fidelity rep didn't point you to that page. In any case, this will reduce your $3,000 of Colorado taxable income by about $1685. Maybe the saved tax will be enough for a couple of lift tickets.

In Turbotax, after you enter the 1099-DIV that contains the SPAXX income, click the box that says something like "These dividends include U. S. Government securities," and enter the dollar amount of the total dividend times 56.16%. Hope that is some help. If you own other mutual funds—even stock funds—they could each have some smaller percentage of U.S. government securities income.

P.S. If you own any muni bond funds, there is a similar table that lists how much of each fund's income came from each state, district, and territory. Most states allow you to exclude the interest that came from their own bonds and (at least for my state) you can also exclude the District of Columbia and all territories. Go figure.
Last edited by depressed on Sun Apr 07, 2019 12:54 pm, edited 2 times in total.


TBillT
Posts: 818
Joined: Sat Sep 17, 2011 1:43 pm

Re: CO Tax: Figuring addback for Fido Gov MM SPAXX divs

Post by TBillT » Sun Apr 07, 2019 3:31 pm

Yes I also found that web page via Google and subtracted for SPAXX and VG Prime etc. in Turbo Tax dividend reporting for state taxes.

The only problem I had was that federal *Interest* Income on FORM-1099 INT (eg; for Federal Farm Credit Bank bonds) was not listed in Box 3 (Gov Interest) by Fidelity, and TurboTax said not to report gov *interest* as Gov Income unless you lived in one of about 6 states. For the remaining states, the idea is apparently to list that interest deduction as an adjustment to your state income. But I found that awkward in Turbo Tax, so for the purpose of the state return I put the FFCB gov income in Box 3 even though Fido did not do so.

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