Fidelity treasury money market (FZFXX) subject to state tax?

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squidfather
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Joined: Tue Mar 13, 2018 6:35 pm

Fidelity treasury money market (FZFXX) subject to state tax?

Post by squidfather » Tue Oct 09, 2018 7:32 pm

I've spent some time searching, and can't seem to get a straight answer on this. Does anyone know if the Fidelity treasury money market (FZFXX), which is one of the core position options in Fidelity brokerage accounts, is subject to state tax? I live in MA, which notes that income received from "government instruments" is tax free.

I ask because the difference here may be enough to make me skip the few minutes I spend occasionally buying the Prime money market (SPRXX) and just leave my emergency fund in the core FZFXX. Yes, we are talking about dollars a year here, but now it's in my head and I just want to know the answer.

stlutz
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Re: Fidelity treasury money market (FZFXX) subject to state tax?

Post by stlutz » Tue Oct 09, 2018 7:43 pm

This is the page you are looking for:

https://www.fidelity.com/tax-informatio ... nformation

The percentage of income from US government securities file shows that it got 53% of it's income from such securities last year. This is the only portion exempt from state tax.

If you are looking for a fund with full exemption, look at their "Treasury Only" fund.

squidfather
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Re: Fidelity treasury money market (FZFXX) subject to state tax?

Post by squidfather » Tue Oct 09, 2018 7:50 pm

Perfect, thank you. That is exactly the page I was (fruitlessly) searching for.

mervinj7
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Re: Fidelity treasury money market (FZFXX) subject to state tax?

Post by mervinj7 » Tue Oct 09, 2018 8:04 pm

squidfather wrote:
Tue Oct 09, 2018 7:50 pm
Perfect, thank you. That is exactly the page I was (fruitlessly) searching for.
I use FDLXX since it's 100% from government securities.
https://fundresearch.fidelity.com/mutua ... /31617H300

shipwreck
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Location: North of the Equator

Re: Fidelity treasury money market (FZFXX) subject to state tax?

Post by shipwreck » Wed Oct 10, 2018 4:14 am

Just curious. Why not purchase Treasury Bonds directly? Yesterdays auction for a 4 week was 2.168%.

RickBoglehead
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Re: Fidelity treasury money market (FZFXX) subject to state tax?

Post by RickBoglehead » Wed Oct 10, 2018 5:43 am

shipwreck wrote:
Wed Oct 10, 2018 4:14 am
Just curious. Why not purchase Treasury Bonds directly? Yesterdays auction for a 4 week was 2.168%.
Because the OP is asking about a core account for a brokerage account, where proceeds go in and out, not an investment.

squidfather
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Re: Fidelity treasury money market (FZFXX) subject to state tax?

Post by squidfather » Wed Oct 10, 2018 7:08 am

shipwreck wrote:
Wed Oct 10, 2018 4:14 am
Just curious. Why not purchase Treasury Bonds directly? Yesterdays auction for a 4 week was 2.168%.
As the other reply stated, this is for the core position in a brokerage account that I use for short term savings (estimated taxes), emergency fund and as a backup account for my cash management. There is never much in it, but I occasionally would buy prime money market (SPRXX) so that what is there it at least earning a slightly higher yield. FZFXX is an option for the core position, so wouldn't need to do anything, and with the favorable state tax treatment, the difference goes from tiny to miniscule.

SpaethCo
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Re: Fidelity treasury money market (FZFXX) subject to state tax?

Post by SpaethCo » Wed Oct 10, 2018 7:46 am

squidfather wrote:
Wed Oct 10, 2018 7:08 am
FZFXX is an option for the core position, so wouldn't need to do anything, and with the favorable state tax treatment, the difference goes from tiny to miniscule.
If you want to chase fractions to close the gap even further, last year 60.16% of SPAXX dividends would have been exempt from state tax, compared to 53.65% of FZFXX dividends.

dalmatiandan
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Re: Fidelity treasury money market (FZFXX) subject to state tax?

Post by dalmatiandan » Wed Oct 10, 2018 12:14 pm

SpaethCo wrote:
Wed Oct 10, 2018 7:46 am
squidfather wrote:
Wed Oct 10, 2018 7:08 am
FZFXX is an option for the core position, so wouldn't need to do anything, and with the favorable state tax treatment, the difference goes from tiny to miniscule.
If you want to chase fractions to close the gap even further, last year 60.16% of SPAXX dividends would have been exempt from state tax, compared to 53.65% of FZFXX dividends.
For my own education, can you please describe how I will use this information come tax time?

I have SPAXX as the settlement account for my very first, small taxable brokerage. At tax time, I’ll presumably have some form from Fido that talks about dividends earned? How do I apply the percentage (60.16% or whatever) to my dividends on my state tax return? Will Fido tell me how much is state tax exempt, for instance?

Thanks!
Dan

squidfather
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Re: Fidelity treasury money market (FZFXX) subject to state tax?

Post by squidfather » Wed Oct 10, 2018 2:09 pm

SpaethCo wrote:
Wed Oct 10, 2018 7:46 am
If you want to chase fractions to close the gap even further, last year 60.16% of SPAXX dividends would have been exempt from state tax, compared to 53.65% of FZFXX dividends.
I did the math on this one - based on the current 7 day compound yield (1.79% for FZFXX vs 1.78% for SPAXX) and my state tax and marginal federal tax rates, FZFXX still wins. By $0.04 after tax per $10k invested.

Fractions indeed.

SpaethCo
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Re: Fidelity treasury money market (FZFXX) subject to state tax?

Post by SpaethCo » Wed Oct 10, 2018 5:36 pm

dalmatiandan wrote:
Wed Oct 10, 2018 12:14 pm
For my own education, can you please describe how I will use this information come tax time?
I just followed these instructions and plugged in the numbers on my tax forms.

https://www.fidelity.com/bin-public/060 ... r_2017.pdf

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