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Greetings,

I want to apologize in advance for this off topic post. I tried the tax strategies board but I haven't found the answer yet. Please ignore the post if it has no interest to you. I know there are many people who manage money on this board and I have spent too many hours trying to figure this one out on my own.

I'm in NY state. I usually buy T bills but last year I left additional cash in a US treasury only money fund which derived 100% of its income from US Government Obligations. Like a treasury bill, the interest on this MMF should be tax exempt from state and local taxes. Unfortunately the firm that does my taxes is unsure how to account for it and submit it properly. I looked at Form IT-201 (Resident Income Tax return for NY)and saw that on page 17 it indicates the that the interest belongs on Line 28, exactly where the Treasury bill interest goes. There is one catch. It says that if you include an amount on line 28 from more than one line on IT-201 you have to include a schedule showing the breakdown from each line. I have a couple of funds I'd like to include in addition to the Treasury bill interest I accumulated this year. I mentioned this to my accountant and the firm still wasn't sure how to do this electronically. If anyone has done this before in NY (or anywhere else) I would be eternally grateful. In my research I found that it is pretty simple to do in Virginia. I'm certain it can be done in NY otherwise why would brokerages provide the supplemental information. Unfortunately, none of my friends or relatives have done it. Thank you very much for you consideration and once again, apologies for the off topic post. I am desperate.

Thank you.

Here are the important lines I cited.....

Dividends you received from a regulated investment company(mutual fund) that invests in obligations of the U.S. government and meet the 50% asset requirement each quarter qualify for this subtraction. The portion of such dividends that may be subtracted is based upon the portion of taxable income received by the mutual fund that is derived from federal obligations. Contact the mutual fund for further information on meeting the 50% asset requirement and computing your allowable subtraction (if any).

If you include an amount on line 28 from more than one line on Form IT-201, submit a schedule showing the breakdown from each line.

Do not list the same interest more than once on lines 28 and 31; see the instructions for Form IT-225, subtraction modification numbers S-121 and S-123.




Here is the full instruction for Line 28 – Interest income on U.S. government bonds.......


Line 28 – Interest income on U.S. government bonds

Did you include interest income from U.S. government bonds or other U.S. government obligations on lines 2, 6, or 11? If No, go to line 29.

If Yes, enter the amount of interest income earned from bonds or other obligations of the U.S. government. Dividends you received from a regulated investment company
(mutual fund) that invests in obligations of the U.S. government and meet the 50% asset requirement each quarter qualify for this subtraction. The portion of such dividends that may be subtracted is based upon the portion of taxable income received by the mutual fund that is derived from federal obligations. Contact the mutual fund for further information on meeting the 50% asset requirement and computing your allowable subtraction (if any). If you include an amount on line 28 from more than one line on Form IT-201, submit a schedule showing the breakdown from each line.

Do not list the same interest more than once on lines 28 and 31; see the instructions for Form IT-225, subtraction modification numbers S-121 and S-123.

https://www.tax.ny.gov/pdf/2016/inc/it201i_2016.pdf
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