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Vanguard - Alternative minimum tax - Tax-preference dividends by fund 2012

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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.

Vanguard fund* Percentage of dividends derived from private activity bonds
California Intermediate-Term Tax-Exempt 0.00%
California Long-Term Tax-Exempt 0.00%
California Tax-Exempt Money Market 15.87%
Florida Focused Long-Term Tax-Exempt Fund 0.00%
High-Yield Tax-Exempt 12.96%
Intermediate-Term Tax-Exempt 0.00%
Limited-Term Tax-Exempt 0.00%
Long-Term Tax-Exempt 0.00%
Massachusetts Tax-Exempt 0.00%
New Jersey Long-Term Tax-Exempt 0.00%
New Jersey Tax-Exempt Money Market 20.21%
New York Long-Term Tax-Exempt 0.00%
New York Tax-Exempt Money Market 20.40%
Ohio Long-Term Tax-Exempt 0.00%
Ohio Tax-Exempt Money Market 11.91%
Pennsylvania Long-Term Tax-Exempt 0.00%
Pennsylvania Tax-Exempt Money Market 9.12%
Short-Term Tax-Exempt 0.00%
Tax-Exempt Money Market 17.73%
Tax-Managed Balanced 0.00%

*This information applies to all share classes of a fund.

Notes:

  • 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.

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