What You Need to Know About Capital Gains Distributions
If you own mutual funds in a taxable account, you may find yourself with a tax bill despite not having sold a single share.
Question: Do I have to pay taxes on fund gains, even if I don't sell any shares of the funds?
Answer: Unfortunately, sometimes the answer is yes. If you own mutual funds in a taxable account, you may find yourself with a tax bill for mutual fund capital gains and income distributions. And you may have to pay taxes on these gains even if you didn't sell a single share and even if you reinvested the income or capital gain right back into the fund and you never even received a check.