mutual fund tax ? - my brain hurts

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SandiSAHM
Posts: 2263
Joined: Fri Aug 28, 2015 11:46 am
Location: Oklahoma

mutual fund tax ? - my brain hurts

Post by SandiSAHM »

For weird reasons, I need a quick cash influx. I have some $ in mutual funds that were funded with after-tax money in the early/mid 1990s and became solely mine as part of a divorce settlement. I've never added to them since, as they were not 'my' preferred investment companies, they were ex's.

They've grown. Every year I've seen tax reporting forms re gains, and while it's not been a leaps and bounds thing, in the 19 years they've sat around each has more than slightly doubled in value.

What the heck is going to happen tax wise? I've PAID taxes, every year, on the gains. They are NOT retirement funds, there's been no avoiding tax as I've gone along. Do I get taxed AGAIN when I sell the shares?

Am I better off waiting 'til January to close them? We're making more $ next year than this year (raise came late in the year but was major) so I figured if I'm going to boost "income" for a year, better to do it this year... but if it's not taxable I guess which year it comes out won't matter?

Called my accountant. Naturally his secretary said he's on his annual vacation. I guess I'd go, too, if my first quarter was going to be the hoopla that his will be. Help?
icfrugal1
Posts: 2952
Joined: Fri Aug 28, 2015 12:54 am

Re: mutual fund tax ? - my brain hurts

Post by icfrugal1 »

I DO NOT KNOW ANYTHING !!!!I am not yelling, I just want you to know that I know nothing but. i would assume that you would just pay taxes n any capital gains.

So already paid tax on $1000, sell for $2000 = tax on $1000.

Can you get a software tax program on put it in to see?

IC
colonialgirl
Posts: 1835
Joined: Sat Aug 29, 2015 2:01 am
Location: Central Illinois

Re: mutual fund tax ? - my brain hurts

Post by colonialgirl »

Are we talking about a Roth account?
floridacatlover
Posts: 8056
Joined: Fri Aug 28, 2015 7:21 am

Re: mutual fund tax ? - my brain hurts

Post by floridacatlover »

SandiSAHM wrote: Wed Dec 06, 2017 3:11 pm For weird reasons, I need a quick cash influx. I have some $ in mutual funds that were funded with after-tax money in the early/mid 1990s and became solely mine as part of a divorce settlement. I've never added to them since, as they were not 'my' preferred investment companies, they were ex's.

They've grown. Every year I've seen tax reporting forms re gains, and while it's not been a leaps and bounds thing, in the 19 years they've sat around each has more than slightly doubled in value.

What the heck is going to happen tax wise? I've PAID taxes, every year, on the gains. They are NOT retirement funds, there's been no avoiding tax as I've gone along. Do I get taxed AGAIN when I sell the shares?

Am I better off waiting 'til January to close them? We're making more $ next year than this year (raise came late in the year but was major) so I figured if I'm going to boost "income" for a year, better to do it this year... but if it's not taxable I guess which year it comes out won't matter?

Called my accountant. Naturally his secretary said he's on his annual vacation. I guess I'd go, too, if my first quarter was going to be the hoopla that his will be. Help?
Each year you’ve paid taxes on capital gains within the fund as the advisors have bought and sold stock. If a fund has 100 stocks, some are long-term holdings and some are bought and sold each year. These latter ones are where you’ve already paid the taxes. You brokerage firm will take this into account and provide you with a cost basis for the money. So say you invested $5k and the fund is worth $10k, your cost basis might be $7k to account for the taxes you’ve already paid.

Yes, if you are going to sell, it is probably better to do this year. I haven’t followed how the GOP tax bill treats capital gains but right now if you are in a low tax bracket you pay a low %, sometimes even zero.
SandiSAHM
Posts: 2263
Joined: Fri Aug 28, 2015 11:46 am
Location: Oklahoma

Re: mutual fund tax ? - my brain hurts

Post by SandiSAHM »

colonialgirl wrote: Wed Dec 06, 2017 4:56 pm Are we talking about a Roth account?
No. Just shares of straight mutual funds, as touted by Money Magazine in the early 90s. One's a "global equity fund" and the other is just called a 'guardian' fund, with different investment cos. They're not retirement accounts, were funded with AFTER tax dollars and the dividends and capital gains were reported & tax paid on them every year at tax season.

My thinking is they'll sell the shares, I'll end up with the $, and whatever gains there were this year over last, THAT is what I'll be taxed on, just like every other year. But typically the minute I think something should be *simple* - it turns out to be a convoluted mess. Because since when have taxes on investments ever been simple? :?
SandiSAHM
Posts: 2263
Joined: Fri Aug 28, 2015 11:46 am
Location: Oklahoma

Re: mutual fund tax ? - my brain hurts

Post by SandiSAHM »

floridacatlover wrote: Wed Dec 06, 2017 5:18 pm Each year you’ve paid taxes on capital gains within the fund as the advisors have bought and sold stock. If a fund has 100 stocks, some are long-term holdings and some are bought and sold each year. These latter ones are where you’ve already paid the taxes. You brokerage firm will take this into account and provide you with a cost basis for the money. So say you invested $5k and the fund is worth $10k, your cost basis might be $7k to account for the taxes you’ve already paid.

Yes, if you are going to sell, it is probably better to do this year. I haven’t followed how the GOP tax bill treats capital gains but right now if you are in a low tax bracket you pay a low %, sometimes even zero.
!!! Thank you. It makes sense the way you wrote it.

I could not for the LIFE of me figure out some of what I was reading.

We're not in a low bracket, but this year is lower than next year will be, so I figure if I'm going to bump it up a little, better now than then.

That's what I was afraid of, that the new tax plan won't be kind. I didn't want to go into debt over both kids needing oral surgery in the first quarter of next year or DS's subsequent braces. Even with insurance, this is going to sting. Worth it, many times over, but not many times over PLUS interest. ;)
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