National Municipal Bond and National Municipal Money Market Funds - Federal/State Tax Exemption
Generally, the income dividends paid by all of the Dreyfus municipal bond and municipal money market funds are exempt from federal income tax. However, such dividends must still be reported on your income tax return (Form 1040, Line 8b). This is an information-only requirement (unless you're also receiving Social Security benefits or may be subject to the AMT, as discussed here).
Please note that under certain circumstances taxable ordinary income and capital gains may also be distributed by municipal bond and municipal money market funds and will be reported as such in Box 1a or Box 2a of your Form 1099-DIV.
In general, most states do not impose income tax on interest derived from their own municipal obligations or on certain obligations of United States territories (e.g., Puerto Rico, Guam, etc.). However, each state has its own rules that must be met in order to obtain this state tax-free treatment.
For example, in California, at least 50% of a mutual fund's assets must consist of certain obligations, the interest on which is exempt from taxation by California. Regardless of which state you file in, the percentage of your tax-exempt dividends which were derived from state and local obligations is likely to play an important part in calculating your state tax liability.
Dreyfus offers a table listing the percentage of tax-exempt dividends which were derived from state and local obligations held by Dreyfus' national municipal bond and national municipal money market funds during 2014, reflected on a state-by-state basis. Simply select a fund from the pull-down menu below to view that fund's percentages.
If your fund does not appear on the pull-down menu, please refer to your year-end statement to verify that fund's applicable percentage, if any, for your state.
You may also download printer-friendly versions of the tax information that follows.