Found a stat that 90 percent of index fund dividends get reinvested but not tracked right for taxes

I was digging through an IRS publication last night for my own taxes. It said something like 9 out of 10 people who have index funds in taxable accounts don't adjust their cost basis properly when they reinvest dividends. That blew my mind because I've been doing it wrong for like 3 years. I found it on page 23 of Pub 550. So if you have a fund like VTI or SPY in a regular brokerage account, you need to check if your brokerage tracks those reinvestments as separate lots. Has anyone else noticed their cost basis getting messed up from this?

3 comments

3 Comments

phoenixb341mo ago

So the IRS figured out the one thing lazier than paying taxes, which is not paying taxes on money you already forgot you had.

anthony_campbell881mo ago

Reminds me of finding cash in an old coat pocket.

fiona9851mo ago

Honestly, I've been there too. The trick is to just report it as 'unclaimed property' if it's under a certain amount, most states don't bother chasing it. @phoenixb34 is right though, the IRS is weirdly good at finding money that's technically yours but you forgot about.