On a state income tax return, how do I report the portion of mutual fund dividends coming from US Government bonds so they are exempt from state income tax?
I found the answer. I was able to input the data on the Federal return, and after much searching on the Maryland return, I found that the dividends from US Government Bonds were aggregated and presented on MD Form 502SU Subtractions from Income) as a subtraction from taxable income. The total shows up on page 2 on line ab: Income from U.S. Government Obligations. The ProSeries software had suggested when I input it on the Federal return that I might need to also enter it manually on the State return, but that was not the case in Maryland.
