Tax Question...held needed

[WendyZ]

Hello everyone,
I've been reading this site for sometime. Lurking in the background so to speak. So I've decided to come aboard and ask a question.
I normally do our taxes as they are cut and dry. We can't even itemize any more, but I'm not going to remortgage my house just to claim the interest.
My question...I received my 1099 from my money market account. This year there is a new page I'm not sure what to do with. I tried searching the internet and just got off the phone with the investment company(no help there). I thought I'd try here.
I received a "State Tax Exclusions" page. It shows for the source of income my mmacct, then the % of dividends from federal or municipal obligations, my income and the potential amt of state tax exclusion. My question is what do I do with this if anything with my taxes? There are no directions and I can't find any info on the net. Been to IRS website, State of Michigan and I did a general search, before calling the investment people.
I don't want to go to an account for one piece of paper. Or does anyone know who/where I could call for help?
Thanks for your time.


PS...Disneysteve if you read this "Hello!" from a fellow Diser!!

[disneysteve]

Hi Wendy! Welcome to SavingAdvice! Quite a few DISers have found their way over here (usually by my urging).

To answer your question kind of, a certain portion of your earnings may be exempt from state and/or federal taxes.

Let's say you earned $1,000 in interest from your MMA. The form shows that 1% came from federal obligations. Interest earned from federal obligations is not taxable, so $10 of your interest would be exempt from taxation. I'm no tax expert - I use an accountant personally - so I'm not sure how you go about reporting this non-taxable portion of the income.

There are some more tax-savvy folks here who can probably give more helpful info.

[WendyZ]

Thanks Steve. That's more than I understood 30 minutes ago. Hopefully someone can guide me as to what to do with this info.

PS...I love your quote about your daughter's education. I have one that will start college this fall.

[scfr]

My suggestion would be to call the issuer of the 1099 and ask them.

(Can't help you with state taxes, but on our federal tax return last year we reported federally tax-exempt interest on line 8b.)

[Hypersion]

Hi Wendy! Welcome to SavingAdvice! Quite a few DISers have found their way over here (usually by my urging).

To answer your question kind of, a certain portion of your earnings may be exempt from state and/or federal taxes.

Let's say you earned $1,000 in interest from your MMA. The form shows that 1% came from federal obligations. Interest earned from federal obligations is not taxable, so $10 of your interest would be exempt from taxation. I'm no tax expert - I use an accountant personally - so I'm not sure how you go about reporting this non-taxable portion of the income.

There are some more tax-savvy folks here who can probably give more helpful info.

Some states (like CA) have a minimum threshold you have to meet before you can right off any of the interest. In CA it's 50%. Or at least it was in 2006.