Tax season is upon us, and many investors may receive an unpleasant surprise on the 1099 forms from their investment accounts. Box 2a on Form 1099-DIV reports total capital gain distributions from mutual funds and exchange-traded funds (ETFs). These distributions represent gains realized by the funds and are taxed as long-term capital gains in the year they are paid to the investors. Translated into plain English: you have to pay tax on capital gain distributions.
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