Qualified vs Ordinary Dividends
Qualified dividends receive preferential tax treatment (typically 0%, 15%, or 20% in the US).
Ordinary dividends are taxed at your regular income tax rate.
Most dividends from major US corporations are qualified, but REIT and MLP distributions are typically ordinary.
Holding Period Requirements
To qualify for lower rates, you must hold the stock for more than 60 days during the 121-day window around the ex-dividend date.
Track your holding periods carefully, especially if you trade frequently.
Tax-Efficient Dividend Investing
Hold dividend stocks in tax-advantaged accounts when possible.
Consider the tax implications when comparing dividend yields.
Reinvested dividends still create a tax liability in taxable accounts.
