Qualified Dividend
A dividend taxed at long-term capital gains rates.
What is Qualified Dividend?
Dividends from US corporations and qualifying foreign corporations, where the holding-period requirement is met, receive the preferential 0/15/20% rates. Non-qualified dividends - REITs, most bond fund income, some foreign payers - are taxed as ordinary income.
Qualified Dividend: a worked example
$5,000 qualified costs $750 at 15%; the same amount non-qualified costs $1,850 at 37%.
More terms in Taxes & Account Types
Capital Gain (Short-Term vs. Long-Term)
Profit on a sale, taxed by how long you held it.
Cost Basis
What you paid, used to compute gain or loss on sale.
Wash Sale Rule
A loss is disallowed if you rebuy the same security within 30 days.
Tax-Loss Harvesting
Realizing losses to offset gains and up to $3,000 of ordinary income.
Traditional IRA / 401(k)
Deduct now, grow tax-deferred, pay ordinary income tax on withdrawal.
Roth IRA / Roth 401(k)
Pay tax now, grow tax-free, qualified withdrawals are untaxed.
Required Minimum Distribution (RMD)
Mandatory annual withdrawals from tax-deferred accounts starting at 73.
Step-Up in Basis
Inherited assets reset to market value at the date of death.