Tax reporting on balanced and bond funds

ravitz

I am confused about taxes on balanced funds.

When you get a distribution from a balanced fund, the money comes from dividends from stocks, interest from bonds, and capital gains from sales. On my unified tax reporting statement, I see dividends (ordinary and qualified) and capital gains from 1099-DIV. But on the 1099-INT section it's all 0s except for a trivial amount from my sweep account.

Is the interest reported as dividends? Qualified or ordinary? Is it the same for bond funds?

Thanks for any light you can shed on this.

yogibearbull

Fund dividends are reported as 1099-DIV (even for bond and m-mkt funds). For allocation/balanced funds, those from stocks & bonds are not separated. 1099-INT is from banks, CDs, etc and there may be some in 1099-INT in brokerage statements but not much. Only some stock dividends are qualified and those are shown separately.

bee

Wonder if VTMFX handles this a little differently since its bond side is mostly tax free munis...USBLX is built similarly.

Boglehead conversation on the topic:
bogleheads.org/forum

General Topic of Taxes on Mutual Funds:
when-bad-taxes-happen-to-good-funds

ravitz

So I think my answer is that for bond and balanced funds, bond interest is included under total ordinary dividends. Total ordinary dividends (which come from stocks and bonds) includes qualified dividends (which only come from some stocks).