Alternative minimum tax—Tax-preference dividends by fund 2012
Vanguard | 01/11/2013
This tax update provides important information to help shareholders determine the portion of the tax-exempt interest dividends they received in 2012 from any of the Vanguard municipal bond funds and Vanguard Tax-Managed Balanced Fund that is attributable to private activity bonds and considered a tax-preference item for alternative minimum tax (AMT) purposes.
The table lists all the Vanguard funds that derived income from private activity bonds during 2012 and the percentage of tax-exempt interest dividends that is considered a tax-preference item for each of those funds in 2012.
Note that this tax-preference item is just one of several preference items that must be added back when computing the shareholder's alternative minimum taxable income.
Percentage of dividends derived from private activity bonds
California Intermediate-Term Tax-Exempt
California Long-Term Tax-Exempt
California Tax-Exempt Money Market
Florida Focused Long-Term Tax-Exempt Fund
New Jersey Long-Term Tax-Exempt
New Jersey Tax-Exempt Money Market
New York Long-Term Tax-Exempt
New York Tax-Exempt Money Market
Ohio Long-Term Tax-Exempt
Ohio Tax-Exempt Money Market
Pennsylvania Long-Term Tax-Exempt
Pennsylvania Tax-Exempt Money Market
Tax-Exempt Money Market
*This information applies to all share classes of a fund.
With the exception of Vanguard Tax-Managed Balanced Fund, 100% of the dividends paid by each of the funds listed above were tax-exempt interest dividends.
An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund.
All investments are subject to risk. Investments in bond funds are subject to interest rate, credit, and inflation risk. Although the income from a municipal bond fund is exempt from federal tax, you may owe taxes on any capital gains realized through the fund's trading or through your own redemption of shares. For some investors, a portion of the fund's income may be subject to state and local taxes, as well as to the federal Alternative Minimum Tax. It is possible that the Tax-Managed Balanced Fund will not meet its objective of being tax-efficient.
Consider consulting a tax advisor concerning your individual situation.