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

Forum|Forum|4 years ago
February 23, 2022
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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.

bhuetherAuthor

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.