Most of you are aware that during the month of November and December, many mutual funds pay out dividends and capital gains that have accumulated during the year. If you own shares on what is known as the ex-dividend date, you will have to pay taxes on the payouts, even if you reinvest the money. Due to the poor performance in the stock market this year, you may think that no gains will be reflected on your 1099 statements, but some funds are still sitting on large gains from 2021 and may have been or will be forced to sell some of those securities to meet investor sell orders. As a result, it will be important to check with your broker or published information on your mutual fund(s) to get estimates of capital gains distributions along with the date of distributions.
Review your portfolio to see if you have any mutual funds, stocks or bonds that have declined in value since you purchased them. Selling them before year-end will provide losses to offset your gains and avoid paying any taxes on these unintended gains.
Be aware that a loss will be disallowed if substantially similar stock or securities are acquired within 30 days before or after the date of sale or disposition.
If you have questions about the information outlined above or need assistance with a tax or accounting issue, Selden Fox can help. For additional information call 630.954.1400 or click here to contact us. We look forward to speaking with you soon.