Any federally tax-exempt income dividends you received from American Funds in 2015 are subject to special state income tax considerations. (These dividends are reported in Box 10 of Form 1099-DIV and on your year-end statement.)
The American Funds listed below paid some federally tax-exempt income dividends in 2015 that were derived from municipal bond interest subject to the federal alternative minimum tax (AMT).
American Funds Short-Term Tax-Exempt Bond Fund®
American Funds Tax-Advantaged Income Portfolio℠
American Funds Tax-Exempt Fund of New York®
American Funds Tax-Exempt Preservation Portfolio℠
American High-Income Municipal Bond Fund®
Limited Term Tax-Exempt Bond Fund of America®
The Tax-Exempt Fund of California®
The Tax-Exempt Fund of Maryland®
The Tax-Exempt Fund of Virginia®
The Tax-Exempt Bond Fund of America® did not pay any federally tax-exempt income dividends derived from municipal bond interest subject to AMT.
You’ll need the amount reported to you in Box 11 of Form 1099-DIV, “Specified Private Activity Bond Interest Dividends,” to calculate your AMT if that tax applies to you. This amount is a portion of the amount in Box 10.
The AMT calculation is complex. We recommend you consult your tax advisor.
All or some of your federally tax-exempt income dividends may be taxable in your state or jurisdiction.
In fact, some states, such as California, require that mutual funds report the amount of federally tax-exempt income dividends paid to residents of those states. The states that impose no income tax on federally tax-exempt income dividends are listed below.
If you are an individual taxpayer and the state or jurisdiction where you file an income tax return is not shown below, please refer to the Federally Tax-Exempt Income Dividends: State Tax Exclusion Worksheet to determine the portion of federally tax-exempt income dividends that may be excluded for state income tax purposes. (Corporations and other entities in the states listed below may be subject to state income taxation on federally tax-exempt income dividends and may need to complete the Federally Tax-Exempt Income Dividends: State Tax Exclusion Worksheet.)
American Funds Tax-Exempt Fund of New York, The Tax-Exempt Fund of California, The Tax-Exempt Fund of Maryland and The Tax-Exempt Fund of Virginia are 100% invested in municipal bonds exempt from tax in their respective states.
The federally tax-exempt income dividends from these funds may be excluded from state taxable income in their states. For example, if you are a California taxpayer, all of the federally tax-exempt income dividends from The Tax-Exempt Fund of California may be excluded from your California taxable income.
Additionally, federally tax-exempt income dividends from American Funds Tax-Exempt Fund of New York may be excluded from taxable income in New York City.
For investors in American Funds Tax-Advantaged Income Portfolio, 59.95% of the dividends you received (as reported under “Year-to-date: Dividends” in the Activity Detail section of your year-end statement) were exempt-interest dividends. Investors who received Form 1099-DIV should refer to Box 10 for the amount of exempt-interest dividends received from the fund.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.