As reported on your 1099-DIV, your Betterment account may have earned U.S. Government interest income due to bond dividends. This is because your taxable investment accounts may be invested in U.S. Government bonds through bond ETFs, per Betterment’s advice. Generally, the U.S. Government interest portion of a fund dividend income is exempt from state and local income taxes. However, there are some states (NY, CT, and CA) that have an “asset test” which requires 50% of the fund’s assets to be ...