I have Vanguard's VTSAX mutual fund which is doing quite well. It's been quite a while since I had money in a mutual fund but I recall that changes to the tax code sometime in the early 2000's I think, required me to pay taxes even though I did not sell any shares. If I recall correctly since shares in a MF are constantly being sold and bought the Feds decided to tax based on this buying and selling. Is this the case? Will I be required to pay tax on my MF even though I didn't sell a single share?
If this is true will I get a statement from the IRS in January telling me what is taxable? It's hard to plan for a potential tax payment when I don't really know what's going on behind the scenes. If you need more info about my MF let me know and I can post it here.
