What are qualified dividends and how are they taxed?

What are qualified dividends and how are they different from ordinary dividends?

Qualified dividends are dividends paid by U.S. corporations on stocks held for a specific period. They are taxed at a lower rate than ordinary dividends, which are taxed as ordinary income.

What is the holding period for a dividend to be considered qualified?

To be considered qualified, you generally need to hold the stock for at least 61 days during the 121-day period that begins 60 days before the ex-dividend date.

Are there any specific types of dividends that are not considered qualified?

Yes, dividends from certain sources, like real estate investment trusts (REITs) and master limited partnerships (MLPs), are typically not considered qualified.

How do I report qualified dividends on my tax return?

You report qualified dividends on your tax return using Form 1040. They are usually listed on your 1099-DIV form, and you may need to fill out Schedule D for capital gains.