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Old 11-09-2015, 10:31 AM
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Mutual fund cap gains

Last year i was caught out by a couple of my non-IRA mutual funds that had around $5K of LT cap gains, for which I had to pay taxes for in my annual return.

This year at least I am prepared for the same type of gain. My question is should I take the gain as a distribution and pay taxes on the income or should I let the gain re-invest and take the hit in my annual return? Either way I have to pay taxes, although if I take the income I can at least pay the tezes off with what I made as income.

Any help/advice appreciated.



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Old 11-12-2015, 06:48 PM
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Last year i was caught out by a couple of my non-IRA mutual funds that had around $5K of LT cap gains, for which I had to pay taxes for in my annual return.=====>> Aslongas a mutual fund has LTCGs, it can designate part of its dividend as a CG distribution. Then you need to report this part of the dividend as if it were their own LTCG. This treatment applies only to LTCGs. If the mutual fund dividend includes STCGs, you must treat that portion of the dividend as ordinary income, not CG.The LTCG distribution is taxable to you as a fund shareholder since the fund is NOT owned in a tax-deferred IRA/401K account. instead of CG distributions, when it makes a CG ALLOCATION, then, you'll receive a f 2439.

This year at least I am prepared for the same type of gain. My question is should I take the gain as a distribution and pay taxes on the income or should I let the gain re-invest and take the hit in my annual return? Either way I have to pay taxes, although if I take the income I can at least pay the tezes off with what I made as income.===>> aslongas you hold shares in a taxable account, you are required to pay taxes on mutual fund distributions, whether the distributions are paid out in cash or reinvested in additional shares. A CG distribution is taxed as LTCG. That's true even for yiou, as a shareholder,who have held the mutual fund shares less than a year.Distributions from mutual funds occur for several different reasons and are subject to differing tax rates; so,it’s up to you to report mutual fund transactions on your tax return, as well as pay the appropriate taxes on each type of fund income; mutual funds' tax implications are more complex than those of stocks / bonds. the dividends thrown off by a given fund's stocks are taxed as regular income. Although these dividends are bundled into the quarterly / annual distributions that virtually all mutual fund issuers make, they are deemed to be separate from the capital gains that may be included in these distributions. mutual fund distributions are issued on a pro rata basis. So, your personal distribution will be proportional to the size of your ownership stake in the fund. If you own 3% of the fund's outstanding shares, your distribution will account for 3% of the fund's capital gains during the distribution period. Regardless of when you purchase a fund's shares, you'll pay taxes on these distributions on a pro rata basis as well. Needless o say I guess An obvious solution to cut taxes would be to put more money into tax-deferred retirement plans, such as IRA accounts or 401(k) plans or
consider tax-managed funds, which try to offset capital gains with capital losses, minimizing distributions. putting stock-fund shares into an IRA to avoid taxable distributions might be creating a bigger tax bill down the road. Most investors choose to reinvest mutual fund capital gains and dividends. Reinvestment provides several benefits, but there may be circumstances when it is better to take distributions in cash. Yo may discuss on yoru issue wiith fund manager or etc.



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