Understanding dividends: Qualified vs Non-Qualified. Each has distinct tax implications for investors.

Qualified dividends enjoy lower tax rates, similar to long-term capital gains, offering a tax advantage.

For a dividend to be qualified, the stock must be held for a specific period: at least 60 days.

Non-qualified dividends are taxed as ordinary income. Rates depend on your income tax bracket.

Most common and preferred stocks from U.S. companies offer qualified dividends, with certain criteria.

Real Estate Investment Trusts (REITs) usually pay non-qualified dividends, important for property investors.

Dividends from foreign companies are often non-qualified, but tax treaties can impact this status.

Dividends are reported annually to investors and the IRS, with clear distinction between types.

Knowing the difference can influence investment strategy and tax planning. Choose your investments wisely.