Question About Capital Gain Distribution


T

Tiziano

One of the mutual funds that I have had a rather large capital gain
distribution in 2007. This has resulted in an underpayment of taxes
during the year of 2007, so now I owe the IRS additional money and
probably a tax penalty.

What is the best way to find out if a mutual fund is getting ready to
declare a large capital gain distribution? Is information about
impending capital gain distributions buried somewhere in mutual funds'
quarterly reports? (I didn't see it when I glanced over the reports...)
Or should I periodically contact the mutual funds for such
information? And how will they know ahead of time how much my share of
capital gain distribution will be?

I am not a financial wizard, I do not read the Wall Street Journal etc.
so I am looking for some simple way of finding out ahead of time
information like this that could have a significant effect on my taxable
income.

Thanks.
 
P

P. Maffia

You can get the info from your mutual fund towards the end of the year by
either phoning or visiting their web site.

Tiziano said:
One of the mutual funds that I have had a rather large capital gain
distribution in 2007. This has resulted in an underpayment of taxes
during the year of 2007, so now I owe the IRS additional money and
probably a tax penalty.
Obnviously you will owe more in tax. However, you may not owe any penalties
as long as you either paid in nat least as muich as you owed last year or
paid in 90% or more of ther taxes due.

Since you claim to be financially naive, I doubt your investment in the fund
is enough so that the extra income, taxed at a 15% rate, is going to be
enough to cause a problem.
 
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J

Jim Kingdon

Obnviously you will owe more in tax. However, you may not owe any
penalties as long as you either paid in nat least as muich as you owed
last year or paid in 90% or more of ther taxes due.
Right. Usually in this kind of situation one of those two will
prevent a penalty, and also, filing well before April 15 can reduce or
eliminate the penalty even if the above don't kick in.
 

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