what are qualified dividends 
ordinary dividends are payments that a public company makes to owners of its common stock shares a qualified dividend is an ordinary dividend reported to the internal revenue service irs which taxes it at capital gains tax rates individuals earning over 44 625 or married couples filing jointly who earn 89 250 pay at least a 15 tax on capital gains for the 2023 tax year 1mira norian investopediaunderstanding qualified dividendsa dividend is considered qualified if the shareholder has held a stock for more than 60 days in the 121 day period that began 60 days before the ex dividend date 2 the ex dividend date is one market day before the dividend s record date the record date is when a shareholder must be on the company s books to receive the dividend for example xyz stock declares a dividend payment on nov 20 and sets a record date for a month later with an ex dividend date of dec 19 those who bought xyz stock before dec 19 and held it for at least 61 days in the 121 day period that began 60 days before the ex dividend date pay the capital gains tax rate on the dividend those who bought xyz stock before dec 19 and received a dividend but did not hold it for the required 61 days would claim the dividend as ordinary income on their tax return for that year individuals receive the next dividend if they purchase stock before the ex dividend date capital gains tax ratescapital gains are taxed at 0 15 or 20 depending on the taxpayer s income capital gains from selling collectibles or qualified small business stock may be up to 28 unrecaptured gains from selling section 1250 real property are taxed up to 25 most investors pay zero or 15 with only the highest earners paying the 20 rate 1irs form 1099 div box 1a ordinary dividends shows all taxpayer dividends qualified dividends are listed in box 1b on form 1099 div and are the portion of ordinary dividends from box 1a that meet the criteria to be treated as qualified dividends qualified dividends must have been paid by a u s company or a qualifying foreign company and the required dividend holding period has been met 2qualified dividends vs ordinary dividendsqualified and ordinary dividends have different tax implications that impact a return 3 the tax rate is 0 on qualified dividends if taxable income is less than 44 625 for singles and 89 250 for joint married filers in the 2023 tax year filers who make more than 44 625 as single or 89 250 jointly have a 15 tax rate on qualified dividends for those with income that exceeds 492 300 for a single person or 553 850 for a married couple the capital gains tax rate is 20 1there is an additional 3 8 net investment income tax niit on investment gains or income to determine this tax the irs uses the lowest figure of net investment income nii or the excess of the modified adjusted gross income magi that exceeds 200 000 for single filers 250 000 for married filing jointly and 125 000 for married filing separately 4