Why does my 1099 form have a large number in Box 2a (I didn't withdraw)

[#1 Cowboys Fan]

One of my 1099 had a number of about $250 in box 1a, and box 1b-----so I knew I would pay taxes on those "Ordinary Dividends".

But box 2a had an amount of $1500 on it---and that made my already small refund number take a hit on Turbo tax.

Is this 2a number really taxable? I never moved/exchanged/withdrew any money.

Not only that---but the account LOST money in 2018!!!!!!

I'm confused......................

Thanks,
Pat

 

[bluehende]

Dividends would be taxable even if you are sitting on a capital loss. I don't have my 1099d yet so cannot specifically comment on numbers in that box.

 

[WinniWoman]

If it is in a taxable account, I believe it doesn't matter if you actually withdrew the dividends. The stocks or mutual fund threw off dividends and they were reinvested in the shares. Most dividend stocks/mutual funds lost money in 2018 because the price of their shares went down. So even though they threw off dividends that money was reinvested in the shares and the value of them went down with the market.

But you still have to pay taxes on the dividends your account generated.

Others can chime in as I might have some of this wrong.

 

[rapmarks]

One year a fund was down thirty thousand dollars but paid out a capital gain distribution of one hundred thousand dollars. Between that fund and a couple of others, we owed forty thousand dollars in addition to our withholding

 

[MULTIZ321]

Box I a of your 1099-DIV will report the total
amount of ordinary dividends you receive,
while box I b reports the portion of box I a
that is considered to be qualified dividends. If
your mutual fund investment makes a capital
gain distribution to you, it will be reported in
box 2a.

Capital gains distributions are taxed at capital gains
rates to the person receiving the distribution. Holders
of mutual fund shares are required to pay capital gains
tax on any capital gains distributions made by the
funds they own.May 16, 2018

Capital Gains Distribution - Investopedia
https://www.investopedia.com ) terms ,

https://www.investopedia.com/search?q=capital+gains

Richard

 

[controller1]

Box 2a is a capital gains distribution which is taxable and, as @MULTIZ321 stated, is taxable at the capital gains rate.

Your statement that the fund lost money in 2018 is irrelevant until such time you sell shares of the fund or the entire fund. At that time, 2018's unrealized loss will be combined with the unrealized gains/losses incurred during your ownership of the fund to determine whether you had a realized gain/loss for the fund which would then be taxed at the appropriate capital gains tax rate.

 

[Talent312]

OTOH, if you had a net capital loss, you could'a sold in 2018 and taken the loss to count against other income.

 

[geekette]

That's the thing with funds: all the buying and selling during the year can be distributed to you at the end of the year. If not held in a tax shelter, you will owe tax and you don't see it coming and have no control over it. Likely you can find the info in your end of year statements from brokerage.

This is why I own stocks directly - I know exactly at the time I make a transaction what the numbers are. Other investors are not causing excessive buy and sell decisions for fund managers. I haven't opened any brokerage statements yet but could tell you with fair precision what the amounts are without consulting end of year statements.

 

[VacationForever]

Our funds are managed by a wealth management firm. The interesting thing is there has never been capital gain or loss reported in all our tax statements, even in a year where we had to sell taxable accounts to raise money. I assume they work through the year to ensure that any gain is balanced by loss when they rebalance the portfolio. I know it will be different if we ask them to sell everything.

 

[zinger1457]

That's the thing with funds: all the buying and selling during the year can be distributed to you at the end of the year. If not held in a tax shelter, you will owe tax and you don't see it coming and have no control over it. Likely you can find the info in your end of year statements from brokerage.

May not have a lot of control over but you should be able to see it coming before the end of the year. Most funds pay out dividends quarterly so it's easy enough to check your account throughout the year, capital gains often don't show up until the middle/end of December but most investment firms but out estimated earnings for all their funds at the end of October so you can come up with an estimate of what your yearly earnings will be.

 

[geekette]

May not have a lot of control over but you should be able to see it coming before the end of the year. Most funds pay out dividends quarterly so it's easy enough to check your account throughout the year, capital gains often don't show up until the middle/end of December but most investment firms but out estimated earnings for all their funds at the end of October so you can come up with an estimate of what your yearly earnings will be.

OP didn't see it coming. I agree it happens roughly same time every year. I haven't had any funds in my taxable portfolio for a couple decades but they were like clockwork.

Not every fund pays divs but that's more predictable than distributed gains. OP was not surprised by divvie amount, only the large cap gains.

 

[rapmarks]

Our funds are managed by a wealth management firm. The interesting thing is there has never been capital gain or loss reported in all our tax statements, even in a year where we had to sell taxable accounts to raise money. I assume they work through the year to ensure that any gain is balanced by loss when they rebalance the portfolio. I know it will be different if we ask them to sell everything.

Hard to have had a loss the last few years