Dividend Reinvestment
When you open a mutual-fund account, you can receive dividends as cash or have them reinvested. You can also do this with stocks in either of these:
- Dividend-reinvestment program
- Employee stock-purchase plan
Most people reinvest their dividends, which buys more shares. However, when you buy shares through reinvestment, it’s like you received the cash and immediately bought more shares. You must keep track of the basis of each share when you buy them — whether directly or through reinvestment.
Related Resources
How are mutual funds taxed when sold? Learn more about reporting mutual fund sales with the tax experts at H&R Block.
How can you tell if a capital gain or loss is short term or long term? Find out more from the tax experts at H&R Block.
Learn more about taxing interest on savings bonds and education savings bond rules with the tax experts at H&R Block.
Learn more about capital loss carryovers and get tax answers at H&R Block.
