Cashing out a mutual fund and owing the IRS?

v b on Thu, 17th Sep 2009 5:28 pm 



Are you sure you will owe anything?

I ask because while my $1000 mutual fund grew to $4000, it’s because I reinvested my dividends along the way. My cost basis at the time of sale was actually $4200, so I had a loss not a gain….

Give&Take 2008 on Sun, 20th Sep 2009 9:37 pm 



You can make estimated taxes. You’ll need an accountant or CPA to tell you how much they think you might owe for 2008.

The Robster on Mon, 21st Sep 2009 8:33 am 



It sounds like you’re doing the right thing by contributing to a 401K and increasing your W4 contributions. My only suggestion to lower the amount you owe next April is to simply increase your $50 to a higher amount.

Judy on Thu, 24th Sep 2009 5:20 pm 



That might be enough, but you could always file a quarterly estimated return and pay some extra in. You might not owe as much as you think. Your basis is whatever you paid for it, plus capital gains and dividend distributions while you’ve held it – you only pay tax on the selling price minus your basis.

ninasgramma on Sat, 26th Sep 2009 1:01 pm 



It seems like the steps you are taking will more than compensate for any additional tax owed. The tax on your mutual fund will be in two parts: the income generated by the fund before you sold it, and the long-term gain on the fund when you sold it.

Most of your additional tax will be from long-term gain, which is at most 15%, or no more than $900. Probably a lot less.

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