2009 Tax Information
When mutual funds distribute their income to shareholders, the distributions may fall into one of several categories. Each is governed by a different set of tax rules.
Net gains from the sale of securities held by a mutual fund for more than one year and then distributed to shareholders are subject to long-term capital gains tax rates, which are currently lower than ordinary income tax rates.
Your federal long-term capital gain tax rate is related to your ordinary income tax rateincluding net capital gains realized, as illustrated in the table below. It's important to note that from 2008 to 2010, tax rates on long-term capital gains will be eliminated altogether (taxed at 0% rate) for taxpayers in the 10% and 15% ordinary tax brackets.2 While the 0% rate on realized long-term capital gains may benefit some taxpayers, those gains continue to increase adjusted gross income, which may affect other tax items; for example, potentially subjecting social security benefits to tax, reducing the available medical expense deduction and limiting various credits, including the retirement Saver's credit, the Dependent Care Credit, the Earned Income Tax Credit, and the Credit for the Elderly or Disabled, for certain taxpayers. Furthermore, realized gains may push taxpayers into a higher income tax bracket, potentially subjecting those gains to tax at a 15% rate. In 2011, unless Congress changes current tax laws, rates on capital gains for investors in all tax brackets are scheduled to revert to rates that were in effect prior to 2003.
| Income Tax Rate |
Rates from 2008-2010 |
|---|---|
| 10% | 0% |
| 15% | 0% |
| 25% | 15% |
| 28% | 15% |
| 33% | 15% |
| 35% | 15% |
1. Information does not apply to Section 1250 gains or other gains subject to special rates.
2. Unless Congress acts to modify rates before December 31, 2010.
Unrecaptured Section 1250 gains are long-term capital gains related to certain depreciation on real estate. Mutual funds, such as RiverSource Real Estate Fund, may designate a portion or all of a capital gain distribution as Unrecaptured Section 1250 gains, which may be taxed at a maximum rate of up to 25%.
Learn more about the 0% tax rate for eligible long-term capital gains
This information is for use with concurrent or prior delivery of a fund prospectus. Investors should consider the investment objectives, risks, charges and expenses of a mutual fund carefully before investing. To learn more about this and other important information about each fund, download a free prospectus. The prospectus should be read carefully before investing.
Investment products are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.
Columbia Management Investment Advisers, LLC and its affiliates do not offer tax or legal advice. Consult with your tax advisor or attorney regarding your specific situation.
Not all products and all share classes are available through all firms.
RiverSource®, Seligman® and Threadneedle® mutual funds are distributed by Columbia Management Investment Distributors, Inc. (formerly known as RiverSource Fund Distributors, Inc.), member FINRA and managed by Columbia Management Investment Advisers, LLC (formerly known as RiverSource Investments, LLC). Threadneedle mutual funds are subadvised by Threadneedle International Limited, an affiliate of Columbia Management. Seligman is an offering brand of Columbia Management.