Natl Muni bond fund interest from multiple states.

[AZ-Tax]

As most if not all of you know, National muni bonds funds include muni bonds in their portfolio from several several states. As we all know, we are required to break down the interest to see how much, if any, was derived from the TP home state bonds but I have seen tax return after tax return of new clients who bring me their previous yr tax return and the preparer lump all the interest as if it was issued from the TP's residence state.

I am going to guess the states are missing out on millions if not billions of lost income tax dollars.

Normally there is a break down supplied by the fund breaking down TE interest paid out in the tax year by state. Does anyone know the name of that document or one that replaces that document? Is it a public document and can it be obtained from the funds website?

[Kram BergGold]

Yes

On the funds web site go to the tax center of most fund companies and you wil find the charts that break down the funds per state.

[Burke]

Normally there is a break down supplied by the fund breaking down TE interest paid out in the tax year by state. Does anyone know the name of that document or one that replaces that document? Is it a public document and can it be obtained from the funds website?

Each payor constructs their own documents and sends out to client. I find if funds are in a brokerage account, they rarely get them. Web site is only place to obtain if the client does not provide. Most of the time I find those calculations are not worth the time to figure up. Also, govt interest included in mutual funds as a subtraction on state returns. Sometimes, that makes a difference.

[JON]

Minnesota

10 years or so ago sent out requests for proof of what portion of munis were Minnesota. It made you watch that issue more closely.

[AZ-Tax]

Jon, who sent that out, state of MN?

10 years or so ago sent out requests for proof of what portion of munis were Minnesota. It made you watch that issue more closely.

Jon, who sent that out, State Of MN? I have had a few new clients over the yrs want me to amend a tax return someone else prepared and when I told them they also need to amend their state, nope.

States got to be losing millions and not billions in income tax due to weak or lack of communication with the IRS.

[Burke]

I think I may have been reading your post backwards. You seem to be talking about including out of state muni interest in the resident state as taxable. I do that all the time. It ALL goes on the state return as taxable if I do not have a statement breaking out what is resident-state tax-exempt. The software will do this automatically unless you code that info to exclude.

[origun]

Muni interest from Puerto Rico, etc

It is my understanding that on a state return, you can deduct muni interest from the home state and also Puerto Rico, Guam, Virgin Islands and maybe there are 1 or 2 other territories. I often find there is more from Puerto Rico than my home state of Oregon for many municipal bond funds. This helps a client a bit on the state return and they think you are a really diligent tax preparer if you find something new that will benefit them.