Oh, those Short Term Capital Gains

[FiveDriver]

Just finishing up our TurboTax file this week.

My DW inherited a sizable chunk of Fidelity Magellan Fund. It performed nicely in 2023, but it paid out a Short Term Capital Gain that blew-up our AGI.

In our tax bracket, Dividends are not heavily taxed. But ST Cap Gains are considered Ordinary Income.

Will Fido with-hold any taxes on Cap Gains for next year ??
I'll call them tonight to see if this is easily done. Otherwise I have to w-h something extra for next year.

 

[TheWizard]

Magellan is a Managed fund, so it's going to have Capital Gains Distributions from time to time.
That's why it's better to hold managed funds only in tax-deferred or Roth accounts and only hold index funds in your taxable account...

 

[audreyh1]

Too bad about the short-term cap gains. Fortunately mine from the few remaining active funds tend to very small. But they do get bundled in with the ordinary dividends.

No Fido does not withhold taxes in ordinary accounts. Only for things like withdrawals from IRAs.