Muni Fund- tax exemption change ?

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advice789
Posts: 65
Joined: Mon Jan 30, 2017 1:47 am

Muni Fund- tax exemption change ?

Post by advice789 » Sun Feb 10, 2019 7:56 pm

Seeking tax advice for a muni fund. I was planning to buy a MMF muni fund. Spoke to one of the reps and he said, the tax exemption only applies for muni’s purchased in the state of residency. I thought this was odd. Hence, say I am in California, I purchase the Vanguard or E Trade muni fund- the general fund not state specific MMF. likely the general muni fund has muni's from many states. Is the general fund exempt from Fed taxes?

fabdog
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Location: Williamsburg VA

Re: Muni Fund- tax exemption change ?

Post by fabdog » Sun Feb 10, 2019 8:06 pm

yes, the general muni fund is exempt from federal taxes.

What the rep may have been trying to communicate that it would not be exempt from state taxes, except to the extent that the bonds in the fund were from your specific state

So if you purchased a CA specific MM fund, it would be both federal and state tax exempt.

The general fund would be federal tax exempt, and to the extent (say 10%, just a guess) of the funds bonds were CA, then 10% of the income would be state tax exempt

Mike

Topic Author
advice789
Posts: 65
Joined: Mon Jan 30, 2017 1:47 am

Re: Muni Fund- tax exemption change ?

Post by advice789 » Sun Feb 10, 2019 8:23 pm

Mike- Thanks for the clarification and the state tax perspective

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

Re: Muni Fund- tax exemption change ?

Post by rkhusky » Sun Feb 10, 2019 8:24 pm

Some states require a minimum amount of muni’s be from their state before any of the dividends are exempt. Check your state rules.

RCL
Posts: 373
Joined: Sat Jul 05, 2014 2:48 am

Re: Muni Fund- tax exemption change ?

Post by RCL » Mon Feb 11, 2019 1:01 am

California's percentage is 50% to be State Exempt
It Is Best To Consult Others Before Taking Unusual Actions

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