Rachel_W
Expert Alumni

Retirement tax questions

You should input your Form 1099-DIV form into TurboTax exactly how it appears.  

Total Capital Gains Distributions from 1099-DIV Box 2a are included as taxable income even though they are reinvested.  They add to the cost basis of your mutual fund and will come in to play when you sell your shares.

For example, say you purchased 200 shares of Mutual Fund A for $2,000 in 2015.  You had taxable dividends/capital gains distributions of $100 in 2015, $200 in 2016 and $250 in 2017.  Your cost basis in the mutual fund shares is your purchase price of $2,000 plus all your reinvested dividends & capital gains distributions of $550 = $2,550. Let's say you sold all of your shares in 2017 for $3,000.  Your gain on the sale would be $450 ($3,000 sales price - $2,550 cost basis).

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