Tax-exempt mutual fund. These distributions generally are treated the same as distributions from a regular mutual fund. Distributions designated as exempt-interest dividends are not taxable. An ordinary dividend is a distribution by a mutual fund out of its earnings and profits. Include ordinary dividends that you receive from a mutual fund as dividend income on your individual income tax return.
Ordinary dividends are the most common type of dividends.
They will be reported in box 1 of the Form 1099-DIV or on a similar statement you receive from the mutual fund. These distributions are paid by mutual funds from their net realized long-term capital gains. Capital gain distributions are taxed as long-term capital gains regardless of how long you have owned the shares in the mutual fund. Undistributed capital gains. Mutual funds may keep some of their long-term capital gains and pay taxes on those undistributed amounts.