Taxes on mutual funds..

[TallBill]

For the first time in my life I've started putting money into a couple mutual funds through USAA. Anyways, how will I end up dealing with the taxes on these? Do you only pay taxes on the income from selling shares at the end? I'm completely clueless and have never owned stock in any form.

Btw, I just have automatic monthly investing set up to toss in a couple hundred monthly.

 

[MichaelD]

I know for sure that when you sell them, you have to pay taxes. I know this b/c I had to sell a bunch of shares. I didn't mention that I had sold shares when I filed my taxes. The IRS sent me a bill for additional tax owed plus penalties. :roll: This happened two years in a row; by the time I got the "We got you, sucka!" letter from the previous years' taxes, I'd already filed for the present year. They found me...TWICE. Bastards.

And BTW, the tax rate on sold mutual shares is roughly 30%. Not cheap at all. Don't sell unless you REALLY have to.

Now...I'm pretty sure that if you earn money on your shares, you have to pay as well.

However, my shares have earned a little bit in the past, I never claimed it and nobody ever came looking for me either.