<prompt> Human: I took out my mutual fund money two years ago to pay off my student loan, which was an awesome decision at the time. I forgot to claim it on my taxes we did a lot of moving and my address was never updated in their system, I never got my tax form in the mail and completely forgot to claim it. I just got a bill for taxing the whole amount removed5-6k.I made all of 28k that year, and this addition put me to around 35k income, and now I owe 850. I was under the impression that I can only be taxed on the gains from the investment, and not the total amount, but I could be wrong. Does anyone have any advice on how I could possibly get this amount lowered, or am I screwed? Is there any recourse for using the money for student loan payments? I have the money, but I am getting married in a year, my fiance just quit her job for a new career pathread: Ill be upping my financial share of responsibilities in the near future, and Id really like to minimize this dent as much as possible.  <response>: I did this once. Missed one of my stock sales and got a bill for 3k. As others have said they assume you paid zero until learning otherwise. When I did it they didnt just send a bill, there was sort of a questionnaire too. I cant remember if it asked what I paid or just had an area for explanationcomments and said I could mail in documentation. Anyway, I just wrote in what my basis was and put a copy of my 1099-B from the sale in which they already have but just throw it in. I mailed it back and a month or two later they sent an updated letter asking for the appropriate amount in taxes. I think it was in the end only about 75. They were nice enough to waive penalties and interest, though maybe because the amount was so low in the end. So no need to pay now, you can just send back corrected info. Since theyve sent an inquiry you dont even need to file an amended 1040. Just follow the instructions on what you got, explain that you forgot and what your basis was, and wait for them to reply. It could be a while to hear back. Then pay. If you know what your gain is you can send a check for the correct capital gains now, and theyll let you know if they want any interest or penalties. I think this happens all the time so dont worry about it. 