How do I report income from shares in a mutual fund which are invested in government obligations?
Interest or dividends from mutual funds which invest in U.S. or Massachusetts’s obligations (e.g. treasury bills, bonds, notes, savings bonds or other obligations of the United States or Massachusetts) are exempt from taxation in Massachusetts. The statement issued by the mutual fund should include what percentage, if any, may be from tax exempt obligations, interest or dividends from state or local governments other than Massachusetts are fully taxable. Certain obligations which may be insured by the U.S. government but are not a debt obligation of the U.S. government are not exempt. Such obligations include Government National Mortgage Associate (GNMA), Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corp. Unlike the federal government, interest or dividends from non-Massachusetts obligations are subject to tax in Massachusetts. It is important to note that capital gains from the sale of government obligations are generally taxable in Massachusetts. The ca
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