Mutual Fund - why might one receive a 1099 DIV and a 1099 B?

[bhuether]

Hi,

I suspect I am not understanding the mechanics of mutual funds.

I have a mutual fund account with Primerica. As I understand from reading Investopia,

"

Mutual funds distribute income to shareholders through capital gains distributions or dividend distributions. Interest earned by a fund's assets is paid as a dividend distribution.

To avoid paying taxes on earnings, mutual funds are required to pass on all net income to shareholders at least once each year. "

So I understand that the 1099 DIV shows my taxable earnings.  But I can't understand why I get a 1099 B when I redeem the mutual fund to get cash.  I mean the 1099 B is basically a cost basis, dealing with earnings or loss, right?  But if there are earnings, they are reported as dividends in the 1099 DIV, and I am paying taxes on those earnings.

Why does that seem like double taxation to me?

Can someone set me straight?

thanks!

[AamilD]

1099 DIV shows the dividend payout to shareholders from the profits of a company.

1099B shows capital gains or losses. So it will state the cost price and the selling price ( proceeds ) and the difference is the capital gain.

So it is not double taxation in a sense that 1099 DIV is a dividend which is given from the profits of a company to its shareholders while 1099B shows the the cost you paid to get that mutual fund and what you sold it for and the difference is the capital gain/loss.

[bhuether]

Thank you for the insight. The odd thing is, I don't get a 1099B from Charles Schwab. They send a 1099 DIV that shows capital gains.  So just trying to wrap my head around why Schwab reports capital gains one way, and Primerica another way.

[AamilD]

Please also visit Mutual Funds Distribution which provides additional information on how the information is reported.

[6143140189]

The answer does not seem to be the whole story.  Note that a 1099-DIV box 2a is capital gains.  I also seem to see double counting of capital gains.  For 2024 I have a 1099-B that shows the gain from mutual fund sales, clear as a bell.  However my 1099-DIV shows capital gains in box 2a and I can't see where they come from.  I had the same fund last year, but no sale like this year, and there was no entry in the 2023 1099-DIV box 2a.

[fanfare]

You  see differences, due to the distribution policies of the funds you have chosen to invest in.

[Mike9241]

the capital gain dividend reporting is when the fund sells some of its holdings. the 1099-B is when some of the shares of the fund you are holding are sold.  For example, an ETF will have to sell shares you hold and others hold to pay operating expenses. Not sure if the fund is holding shares that undergo a taxable merger. you would need to contact the fund to clarify the reason for receiving the 1099-B