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Subject:  Estimated Taxes for Mutual Fund Capital Gains Date:  2/6/2001  6:29 PM
Author:  c130king Number:  7548 of 18062

Hello Again,

Got hit by pretty big and unexpected capital gains on my mutual funds in 2000. Not from me selling the funds but just from the actions of the fund manager selling off stocks in the fund.

My question is how to take care of this through the year so that I don't have a big tax bill for 2001.

My plan is to pay estimated taxes in Apr, Jun, Sept, and Jan. I will calculate the value of all the distributions I recieved in that quarter (based on transaction reports from the brokerage) and multiply it by 28% and send that in as a estimated tax payment.

Last year most of my funds only distributed gains and dividends in December. If I plan on paying estimated taxes next year to cover these gains do I need to pay estimated taxes in Apr and in Jun if I don't have any capital gains or dividend distributions up to that point? Or is it okay to only pay estimated payments in the quarters that I actually have any distributions? The intent is to avoid owing over $1000 to avoid penalties. I have the appropriate withholding on my pay so that should not be a factor.

Is this the way other fools pay estimated taxes on capital gains from mutual funds? Does this even make sense? Any help would be appreciated.


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