Non-Qualified Dividends in Municipal Bond Fund Not Tax-Free. How to Fix Report of Tax-Free Income to

Deborah Anderson
edited October 2018 in Investing (Windows)
I have several municipal bond funds in a taxable account. This year, a couple of the funds have something called Non-Qualified Dividends, which are apparently not tax-free, because if these amounts are included in my Tax-Exempt Dividends Report, the total does not agree with the amount of Tax-Exempt Dividends on my 1099. If I subtract these amounts, my figures agree with the 1099. My problem is how do I change the Tax-Exempt Dividends Report? I have tried adding artificial transactions in my register as Miscellaneous Expenses, and checked Miscellaneous Expense as a category that gets included in the report, but although the transaction shows, no amount shows in the report, and the total amount of dividends in that muni fund does not change. I think that would also throw off my register, as I did actually receive these amounts. I could possibly characterize them as Short Term Capital Gains, as there were some, which I initially recorded as Reinvested Dividends. When I changed these Reinvested Dividends to Reinvested Short Term Capital Gains, the amounts were subtracted from the Tax-Exempt Dividends Report. However, these Non-Qualified Dividend amounts are not actually Short Term Capital Gains, so if I did a Capital Gains Report, presumably that would be wrong. I don't want to change the muni fund to taxable, because it really isn't. I'm using Quicken 2016 Premier. Thanks!

Comments

  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    edited May 2018
    Because Quicken assigns a Tax-Free status to a security, it treats all income from that security as tax-free.  There is no provision to record a portion as tax-free and the remainder taxable.  

    It would (should) be possible to enter a MiscInc and MiscExp transaction that ties off to the 1099 data overall, but I do not think you can enter those with the security name.  You would enter a MiscExp transaction for a specific amount (like $12.34) with the Category = _IntIncTaxFree (thereby reducing your total income under that category, then record a second transaction as MiscInc for the same amount ($12.34) against the _IntInc or _DivInc category (as applicable).  You might want to test that out with and without the security name.  

    For me, the amounts have always been small and I have not bothered with that type of "correction".  I live with the fact that my taxable interest and tax-free interest in Quicken do not tie off exactly to my tax return.  In the same vein, live with the fact that Quicken does not offer me a qualified / non-qualified distinction on dividends.  I expect my Quicken data to be close to my tax return data, but do not expect it to be identical,     
  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    edited October 2018
    Check with the Fund company.  Could those "Non-Qualified Dividends" be, in fact, Capital Gain distributions?
    Q user since DOS version 5
    Now running Quicken Windows Subscription,  Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
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