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Taxes

You’re Facing a Big Tax Bill If You Hold These Mutual Funds

Even if the investments declined in value last year, you might still be on the hook for capital gains.

Mutual funds that lost money last year could still result in a tax bill for holders. — Mutual funds that lost money last year could still result in a tax bill for holders.
Photographer: Daniel Acker/Bloomberg

By

Claire Ballentine

March 21, 2023, 2:30 PM UTC

What’s worse than watching your mutual fund investments decline in value? Getting hit with a big tax bill too.

That’s the reality some Americans are facing this year as the deadline to file taxes approaches. It’s largely a function of how actively managed mutual funds operate: Portfolio managers buy and sell securities within the fund to reposition their strategies, and many did so in 2022’s volatile market.