Double tap: Investors face taxes for funds that fell in 2018

NEW YORK (AP) — As if the worst year for stocks in nearly a decade weren't bad enough, many investors now have to pay a tax bill on top of it.

The headache for investors is a result of how mutual funds are structured and how many times the funds' managers bought and sold shares through 2018. Because of the way tax laws work, the majority of investors with a U.S. stock mutual fund or ETF received something called a "capital-gains distribution" late last year.

Investors holding funds in a tax-advantaged account, like a 401(k) or IRA, don't need to worry about it. But if they hold it in a taxable account, watch out. They'll owe taxes on it, due by this spring, and the rate could be as high as 40.8 percent in a few cases.