Reporting a portion of 1099-DIV as Government Interest

[hoofaman]

I have a 1099-DIV from Merrill Edge, 100% of the dividends earned are from SPDR BIL ETF, which invests in 1-3 month treasury bonds:

https://www.ssga.com/us/en/intermediary ... ll-etf-bil

When I import this into TurboTax, there is an option for me to select:

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

I do that and enter the total dividends received as the amount. Then I'm taken to another page where it asks what percentage of the dividends were U.S. Government interest, 25/50/75/100%, it says confirm the percentage on your 1099. My 1099 tells me nothing about this. When I look at the BIL ETF website I can see that typically about 99.1% is invested in US Government Bonds, the rest cash. That's not a tax form, it's just the current information about the ETF. That is how I came to know that 100% of the dividends would be from U.S. Government interest.

My question is, why doesn't my 1099 indicate the percentage of dividends that are U.S. Government interest and should that matter? Should I be contacting Merrill about this? If I correctly report the U.S. Government interest, but my 1099 says nothing about Government Interest, does that create a potential discrepancy with the IRS?

[Geologist]

What is reported on the 1099-DIV is specified by the IRS. Interest from US Government Obligations is not one of the boxes, so financial institutions may not report it there. This value is not relevant for federal tax filing, which is probably why the IRS doesn't include it.

Merrill or the SPDR sponsor must publish/post a separate document that reports the percentage of income from US Government Obligations for its funds. You need to find that so you know what to put in the Turbotax form. (The typical percentage invested in USGO for the fund is not what you need, you need the exact percentage of income for 2023.)

[hoofaman]

What is reported on the 1099-DIV is specified by the IRS. Interest from US Government Obligations is not one of the boxes, so financial institutions may not report it there. This value is not relevant for federal tax filing, which is probably why the IRS doesn't include it.

Merrill or the SPDR sponsor must publish/post a separate document that reports the percentage of income from US Government Obligations for its funds. You need to find that so you know what to put in the Turbotax form. (The typical percentage invested in USGO for the fund is not what you need, you need the exact percentage of income for 2023.)

Thanks that makes sense I want to use the correct values. I will contact Merrill and ask about additional documents

[jebmke]

My question is, why doesn't my 1099 indicate the percentage of dividends that are U.S. Government interest and should that matter? Should I be contacting Merrill about this? If I correctly report the U.S. Government interest, but my 1099 says nothing about Government Interest, does that create a potential discrepancy with the IRS?

The IRS doesn't care; the government interest is included in the total dividends so the US taxes it all anyway. The US Treasury interest is only relevant for state tax returns if your state allows an exclusion.

[Big Dog]

What is reported on the 1099-DIV is specified by the IRS. Interest from US Government Obligations is not one of the boxes, so financial institutions may not report it there. This value is not relevant for federal tax filing, which is probably why the IRS doesn't include it.

Merrill or the SPDR sponsor must publish/post a separate document that reports the percentage of income from US Government Obligations for its funds. You need to find that so you know what to put in the Turbotax form. (The typical percentage invested in USGO for the fund is not what you need, you need the exact percentage of income for 2023.)

Thanks that makes sense I want to use the correct values. I will contact Merrill and ask about additional documents

you can probably google it, something like 'Merrill Lynch tax exempt/US Government obligations report'.

For example, Vanguard's.

https://investor.vanguard.com/content/d ... n-2024.pdf

[HomeStretch]

Merrill Edge may be similar to Fidelity and Vanguard which publish tax sheets for US Government Obligation % in their tax centers which you can access in your online account or via an internet search.

Vanguard modified their Form 1099-B detail sheets a couple years ago to include the USGO %s for the recipient’s holdings (except, oddly, for the core settlement account VMFXX). It’s a nice feature.

[Geologist]

Merrill Edge may be similar to Fidelity and Vanguard which publish tax sheets for US Government Obligation % in their tax centers which you can access in your online account or via an internet search.

Vanguard modified their Form 1099-B detail sheets a couple years ago to include the USGO %s for the recipient’s holdings (except, oddly, for the core settlement account VMFXX). It’s a nice feature.

It is supplemental information (and not part of the 1099 forms proper) and it is convenient, but many mutual funds/brokerages don't do this.

[billfromct]

You’re probably from one of the states that requires at least 50% of the debt value be U.S. government debt for the interest to be state tax exempt. I believe those states are CT, NJ & CA. I’m only sure about CT but I have read that NJ & CA also have restrictions; maybe others as well.

Maybe someone from those other states will chime in.

bill

[joe-kr]

Ok, BIL etf is from State Street, and it seems they make this as hard to find as possible. I found it here:

Do a Google search for "SPDR ETF 2023 Tax Summary - Secondary Layout"
For me, its the 2nd link on the page - and it's a link to a spreadsheet. When you download the sheet, you can search for "BIL".
Column K of the sheet is "% of Income From Exempt Federal Securities:"

The amount for BIL is 98.43% for 2023.

There may be an easier place to find this information but this works for me.

[hoofaman]

Ok, BIL etf is from State Street, and it seems they make this as hard to find as possible. I found it here:

Do a Google search for "SPDR ETF 2023 Tax Summary - Secondary Layout"
For me, its the 2nd link on the page - and it's a link to a spreadsheet. When you download the sheet, you can search for "BIL".
Column K of the sheet is "% of Income From Exempt Federal Securities:"

The amount for BIL is 98.43% for 2023.

There may be an easier place to find this information but this works for me.

Thank you so much, I was just about to reply and ask this very question.

I was able to easily find this information for Schwab and iShare (BlackRock)

https://www.ishares.com/us/literature/t ... tamped.pdf
https://www.schwabassetmanagement.com/r ... nformation

However I couldn't for SPDR, I found the SPDR spreadsheets but was confused as I didn't see that information initially, I searched for 98.43 and see the line now, thank you!!!

[bene1]

Merrill Edge may be similar to Fidelity and Vanguard which publish tax sheets for US Government Obligation % in their tax centers which you can access in your online account or via an internet search.

Vanguard modified their Form 1099-B detail sheets a couple years ago to include the USGO %s for the recipient’s holdings (except, oddly, for the core settlement account VMFXX). It’s a nice feature.

The OP's question about Merrill comes up from time to time and there are reports that Vanguard and/or Fidelity provide the USGO %s on their customers' consolidated 1099s. However, I have not seen it reported whether Vanguard/Fidelity provide this information for funds that are not their own. E.g., does Vanguard report the USGO % for SGOV?

I'm not in a position to check myself, though I would be surprised if they do.

Since brokerages like Merrill are not the ones sponsoring the funds, I don't see why they would be the ones providing the USGO %s (convenient as this may be for end users).

[HomeStretch]

Merrill Edge may be similar to Fidelity and Vanguard which publish tax sheets for US Government Obligation % in their tax centers which you can access in your online account or via an internet search.

Vanguard modified their Form 1099-B detail sheets a couple years ago to include the USGO %s for the recipient’s holdings (except, oddly, for the core settlement account VMFXX). It’s a nice feature.

… Since brokerages like Merrill are not the ones sponsoring the funds, I don't see why they would be the ones providing the USGO %s (convenient as this may be for end users).

No idea which brokerages report USGO % on Form 1099-DIV as a customer courtesy for funds they don’t sponsor. You would need to research that. E*TRADE does per this thread:
viewtopic.php?t=451182

[bene1]

No idea which brokerages report USGO % on Form 1099-DIV as a customer courtesy for funds they don’t sponsor. You would need to research that. E*TRADE does per this thread:
viewtopic.php?t=451182

Interesting about E*TRADE, thanks. I found another thread which referenced Vanguard.

Vanguard never reports gov't holdings on non-Vanguard funds or ETFs. It is up to the end user to figure it out.

I'm not sure about others.