Qualified Dividends

Qualified dividends are a subset of ordinary dividends that are reported to you on 1099s that are subject to the same preferential tax rate as long term capital gains. The tax rate on qualified dividends goes from 0% to 23.8 % while ordinary income rates go from 10% to 43.4%. The top 3.8% under both types of income is the Obamacare tax on net investment income.  Most taxpayers pay at the 15% rate on qualified dividends. What makes a dividend qualified? There is a 61 day holding period. The dividend is paid by domestic corporations or certain qualified foreign corporations. Dividends from credit unions, mutual insurance companies, farmer's coops, exempt organizations, and certain employee stock ownership plans are not qualified dividends. Qualified dividends are treated the same under the alternative minimum tax as they are under regular taxes.