February 10, 2015
What is a qualified dividend and why should you care?
What is a qualified dividend and why should you care?
A qualified dividend is a dividend that you hold for a longer period of time. These dividends are taxed at the normal capital gains rate and not the earned income rate. This can help you out due to the capital gains rate being much lower and even 0 for some people in the lower brackets. This is a good reason to hold indexs for a long period of time to get the best tax situation for your investments. For the state of Iowa, the state does not differentiate from qualified and no qualified dividends so be aware of that when filing.
Nice work, Garrett. Let’s recap.
(1) Qualified dividends are taxed at a very low rate and that rate could be 0% based on your tax bracket.
(2) Buy investments that help you accumulate qualified dividends. That would take you to stock index mutual funds.
(3) Buy those investments at Vanguard.com. Go!