From 24/7 Wall St. · Ryne Mauck · · 1m
HYG Tax Breakdown for $300k Holders
Taxable income from HYG far exceeds actual gains for $300k holders.
In brief
Taxable income from HYG far exceeds actual gains for $300k holders. A $300,000 HYG investment generates $18,255 taxable income versus $5,550 actual gain after share price drops. Originally reported by 24/7 Wall St..
Taxable Income vs Actual Gain
A $300,000 stake in HYG paid $18,255 in distributions over 12 months.
Total Return Calculation
The same position’s total return was $5,550 after share price dropped $12,705.
Tax Code Treatment
Distributions count as taxable income while share price drops are unrealized losses.
BlackRock Fee Impact
HYG’s 0.49% fee costs $1,470 annually on $300,000, adding $14,700 over 10 years.
Alternative Funds
JNK and HYLB offer lower fees but same tax issues as HYG.
Asset Location Fix
Moving HYG to IRA avoids tax on interest income while keeping gains tax-free.
Action Steps
Check 1099-DIV before next distribution to avoid overpaying taxes.
At a glance
A $300,000 HYG investment generates $18,255 taxable income versus $5,550 actual gain after share price drops.
