Dividends from tax-exempt mutual funds are taxed differently at the federal, state and local levels.
Federal Tax Treatment
Federal tax law allows dividends from mutual funds investing in municipal obligations to be considered tax-exempt dividends. Exempt interest dividends are reported on Form 1099-DIV, Box 10. The amount reported on your Form 1099-DIV, Box 1a, represents the amount of taxable income that can result from normal investment operations of municipal funds and short-term capital gain distributions. Form 1099-DIV, Box 2a is taxable capital gain distributions. The amounts reported on your form 1099-DIV must be included on your tax return.
State and Local Tax Treatment
Some of the federal tax-exempt dividends may also be exempt from state and local taxes, depending on where you file your return. See below for the percentages of income by state. As state and local tax regulations vary from state to state, not all permit such exclusion. If the tax law of your state provides for the exemption, multiply the total income distribution shown on your year-end account statement by the appropriate percentage. This amount can be excluded and the remaining balance should be reported on your state tax return.
This notice is provided to you for informational purposes only and should not be considered tax advice. Please consult your tax advisor for further assistance.
For any other questions, please contact the Fund(s) at 1-800-848-0920.