What are qualified dividends?

Qualified dividends are dividends that are eligible to be taxed at a lower tax rate. Enter the full amount of your dividends in Box 1a as Ordinary Dividends. Then enter the amount of qualified dividends in Box 1b. Qualified dividends are only a designation for determining how to tax the amount of ordinary dividends in Box 1a.

So if you enter 1000 in Box 1a as ordinary dividends, and you enter 600 in Box 1b as qualified dividends, only $1,000 will end up on your tax return as income. The $600 in qualified dividends will make it so $400 of your dividends are taxed at normal rates, and $600 of your dividends are taxed at a lower rate.

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