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Article 32
Dividends Qualified for the 15% Rate
- Dividends paid on common stock of a domestic corporation or a qualified
foreign corporation (no tax exempt corporation) generally qualify.
- Certain preferred stock payments are deemed interest and do not qualify.
You have to check the company and the specific preferred stock.
- Dividends paid to a mutual fund by a qualified stock company can pass
through qualified dividends.
- Interest on bonds and other types of interest earned by mutual funds does
not qualify. Some companies call these payments "dividends" but they're really
ordinary income.
- Most dividends paid by REITs (Real Estate Investment Trusts) do not qualify
but some may and this has to be checked out with each specific company.
- Dividends paid by credit unions, savings & loans, cooperatives and mutual
insurance companies do not qualify.
- Any dividend received by a Qualified Pension Plan, 401(k) or IRA will be
ordinary income when it is withdrawn.
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