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Frequently Asked Questions

Qualified Dividends

Dividends are divided into two broad categories: ordinary dividends and qualified dividends. Ordinary dividends are taxed at the same rate as ordinary income, but qualified dividends are taxed at a lower long-term capital gains rate of either 0% or 15%, depending on your tax bracket.

In order to be considered a qualified dividend, the dividend in question must have been held for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date.

Qualified dividends are reported to you in box 1b of your 1099-DIV [Dividends and Distributions].

Barring any further changes to the law, the special low rates for qualified dividends will expire at the end of 2012 and all dividends will be taxed as ordinary income.