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emc011075
emc011075, Tax adviser
Category: Finance
Satisfied Customers: 2305
Experience:  IRS licensed Enrolled Agent and tax instructor
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I need help with my mutual funds. I want to completely cash

Customer Question

I need help with my mutual funds. I want to completely cash out the mutual fund account and use it for personal expenses. What is the cheapest way for me to do this tax-wise, and what will the tax be on ~$23k?
Submitted: 1 year ago.
Category: Finance
Expert:  emc011075 replied 1 year ago.
Hi. My name is ***** ***** I will be happy to help you.
When you sell your mutual fund you will pay capital gains tax regardless what you do with the proceeds or how you sell it. The difference between the sale proceeds and your basis will be included in your income and taxed accordingly.
There are some tax rules to consider. Long term capital gains are taxed at lower rate than your other income, while short term capital gains are taxed same as your other income. Before you sale, make sure you owned the mutual fund more than one year to qualify for the lower tax rate treatment.
Long term capital gains are taxed depending on your tax bracket. If you are in 10 - 15% tax bracket, your capital gain tax rate will be 0 (no capital gain tax). If you are in higher tax bracket, your capital gain tax rate will be 15%. If you can split the sale into two years (half in 2015 and half 2016), depending on your other income this could save you several hundreds on income tax.
If you give me more information, your filing status and your total estimated income for the year I can give you some ideas what to expect tax wise.

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