Maine 1040 Sch 1 subtraction for US government interest: do "direct US obligations" held in a mutual fund count? Or have to be owned directly by the individual taxpayer?

[sjrcpa · Accepted solution]

There aren't very many Maine preparers around here. I imagine this is discussed in the Maine tax return instructions.

[SoloMio]

No, the Maine instructions merely refer to "direct obligations of the US Government, such as ... US Treasury bills and notes".  Silent as to whether must be directly owned by taxpayer, i.e. a direct obligation of the US to the individual taxpayer-owner of the instrument, versus taxpayer indirectly owning via a mutual fund,  
    Some other states have specific guidance as to a required percentage of a mutual fund's assets or income, sometimes a quarterly test, in order for the US Govt-portion of dividends to be exempt from state income tax.  
    Not sure where 'around here' is -- I was hoping some Lacerte users in Maine might know, since can't find any more specific guidance on Maine Revenue Services site!

[sjrcpa]

around here meant this forum. If Maine doesn't say you must own it directly, I'm guessing the portion of the mutual fund's direct obligations qualifies for the subtraction.

[dave]

I'm a Maine preparer, and mutual fund holdings count for US obligations

[sjrcpa]

Thanks for confirming