Section - Dividend Income - Preferential Tax Rate for Qualified Dividends
3 important questions on Section - Dividend Income - Preferential Tax Rate for Qualified Dividends
How are qualified dividends taxed?
Qualified dividends are taxed at the same preferential tax rates as long-term capital gains
What is the holding period for qualified dividends?
To be qualified dividends, the stock must be held for more than 60 days during the 120-day period that begins 60 days before the ex‑dividend date.
What are examples of nonqualified dividends?
- Employer stock held by an employee stock ownership plan (ESOP)
- Amounts taken into account as investment income
- Short sale positions
- Certain foreign corporations
- Dividends paid by credit unions, mutual savings banks, building and loan associations, mutual insurance companies, and farmers' cooperatives.
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