Tax Preparation Help  
Publication 564 2008 Tax Year

Publication 564 - Introductory Material

Foreign tax credit. Some mutual funds or other regulated investment companies (RICs) invest in foreign securities or other instruments. If you claim a foreign tax credit in 2007 on your share of the foreign taxes paid by the mutual fund or other RIC, you no longer have to report the income or taxes paid on a country-by-country basis. You can summarize the reporting of the income and taxes on Form 1116, Foreign Tax Credit. See Form 1116 and its instructions for more information.

Maximum tax rate on qualified dividends and net capital gain reduced. In tax years beginning after 2007, the 5% maximum tax rate on qualified dividends and net capital gain is reduced to 0 (zero)%. Thus, qualified dividends and net capital gain are not taxed if the regular tax rate that would apply to them is lower than 25%.

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843- 5678) if you recognize a child.

This publication provides federal income tax information for individual shareholders of mutual funds or other regulated investment companies, including money market funds. It explains how to report distributions paid to you by a mutual fund and any expenses connected with your investment. In addition, it explains how to report undistributed long-term capital gains. It also explains how to figure and report your gain or loss when you sell, exchange, or redeem your mutual fund shares. A comprehensive example, with filled-in forms, appears at the end of the publication.

In this publication, the term “mutual fund” means a mutual fund or other regulated investment company.

Mutual fund.   A mutual fund is a regulated investment company generally created by “pooling” funds of investors to allow them to take advantage of a diversity of investments and professional management.

Money market fund.    A money market fund is a mutual fund that tries to increase current income available to shareholders by buying short-term market investments.

  Money market funds pay dividends and should not be confused with bank money market accounts that pay interest.

Qualified retirement plans and IRAs.   The rules in this publication do not apply to mutual fund shares held in individual retirement arrangements (IRAs), section 401(k) plans, and other qualified retirement plans. The value of the mutual fund shares and earnings allocated to you are included in your retirement plan assets and stay tax free generally until the plan distributes them to you. The tax rules that apply to retirement plan distributions are explained in the following publications.
  • Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans).

  • Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans).

  • Publication 575, Pension and Annuity Income.

  • Publication 590, Individual Retirement Arrangements (IRAs).

  • Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits.

Comments and suggestions.   We welcome your comments about this publication and your suggestions for future editions.

  You can write to us at the following address:

Internal Revenue Service
Individual Forms and Publications Branch
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224

  We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.

  You can email us at *[email protected]. (The asterisk must be included in the address.) Please put “Publications Comment” on the subject line. Although we cannot respond individually to each email, we do appreciate your feedback and will consider your comments as we revise our tax products.

Ordering forms and publications.   Visit to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received.

National Distribution Center
P.O. Box 8903
Bloomington, IL 61702-8903

Tax questions.   If you have a tax question, check the information available on or call 1-800-829-1040. We cannot answer tax questions sent to either of the above addresses.


  • 550 Investment Income and Expenses

Form (and Instructions)

  • Schedule B (Form 1040)
    Interest and Ordinary Dividends

  • Schedule D (Form 1040)
    Capital Gains and Losses

  • Schedule 1 (Form 1040A)
    Interest and Ordinary Dividends for Form 1040A Filers

  • 1099-B
    Proceeds From Broker and Barter Exchange Transactions

  • 1099-DIV
    Dividends and Distributions

  • 2439
    Notice to Shareholder of Undistributed Long-Term Capital Gains

  • 4952
    Investment Interest Expense Deduction

See How To Get Tax Help near the end of this publication for information about getting these publications and forms.

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