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Which Dividends Are Taxable?

Alexander Ross • • 7 min read
Which Dividends Are Taxable?

Generally, any dividend that is paid out from a common or preferred stock is an ordinary dividend unless otherwise stated. Ordinary dividends are taxed as ordinary income. Qualified dividends

Qualified dividends
To qualify for the qualified dividend rate, the payee must own the stock for a long enough time, generally 60 days for common stock and 90 days for preferred stock. To qualify for the qualified dividend rate, the dividend must also be paid by a corporation in the U.S. or with certain ties to the U.S.
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are dividends that meet the requirements to be taxed as capital gains.

What type of dividends are not taxable?

Nontaxable dividends are dividends from a mutual fund or some other regulated investment company that are not subject to taxes. These funds are often not taxed because they invest in municipal or other tax-exempt securities.

Is all dividend income taxable?

Tax obligation on dividend for domestic shareholders

For resident shareholders, dividend income from stocks held as investment is taxable under the head of 'Other Income' at the applicable tax slab, irrespective of the amount received.

Alexander Ross
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Alexander Ross

Alexander Ross has covered the video game industry for a decade, writing deep dives on game design, esports tournaments, VR developments, and gaming culture.