This simple guidebook is aimed at investors with mutual funds and ETFs in their taxable accounts. None of it applies to tax-sheltered accounts like IRAs.
1. Funds are pass-throughs. If they profit from capital gains, interest or dividends, they are compelled to pass those profits through to you as distributions. You must pay tax on the distributions. You owe the same tax whether you do or don’t reinvest in more fund shares.
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