I recently increased my investments in mutual funds (after tax dollars) and this year I was astonished to see how much in capital gains distribution I had to report on my taxes. Most of my mutual funds I believe are no loads and I do have some index funds. Here are my questions:
At the point that one withdraws/liquidates mutual funds, do they pay taxes only to the extent that they've withdrawn more than they've contributed?
Also, all the capital gains distribution that I am now paying taxes on, I imagine should be added to the cost basis. If this is the case, how does one keep track of all these cap. gains distributions to determine what gain, if any in the future that one needs to pay taxes on when the fund is liquidated?
Thanks so much.
At the point that one withdraws/liquidates mutual funds, do they pay taxes only to the extent that they've withdrawn more than they've contributed?
Also, all the capital gains distribution that I am now paying taxes on, I imagine should be added to the cost basis. If this is the case, how does one keep track of all these cap. gains distributions to determine what gain, if any in the future that one needs to pay taxes on when the fund is liquidated?
Thanks so much.