Undistributed Capital Gains – Form 2439
A mutual fund usually distributes all its capital gains to its shareholders. The mutual fund company reports these gains on Form 1099-DIV. However, a mutual fund might keep some of its capital gains and pay a tax on them. When this happens, the mutual fund company will send you a Form 2439: Notice to Shareholders of Undistributed Long-Term Capital Gains.
Report these capital gains even though you don’t actually receive them. However, since the mutual fund paid tax on the gains, you can claim a credit for the taxes they pay.
You also need to increase the basis of your mutual fund shares by the difference between these two items:
- Amount of undistributed capital gains you report
- Amount of taxes reported to you as paid
The minimum income amount depends on your filing status and age. In 2017 for example, the minimum for single filing status if under age 65 is $10,400. If your income is below that threshold, you generally do not need to file a federal tax return. Review our full list for other filing statuses and ages.
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