Exempt-interest dividends are paid from tax-exempt interest earned by a mutual fund. Although exempt-interest dividends aren’t taxable, you must report them on your tax return if you are required to file a return for the year.
In some cases, exempt-interest dividends may be subject to Alternative Minimum Tax (AMT). This information should be reported on the tax statement that you receive from the mutual fund company. If it isn’t, contact the mutual fund administrator to find out if the amount is subject to AMT.