qualifying dividends

Qualified Dividend

In the United States, a dividend eligible for capital gains tax rather than income tax. This is advantageous to the investor as capital gains are usually taxed at a lower rate than ordinary income. To become a "qualified" dividend, the security from which the dividend derives must be held for at least 61 days during a certain 121-day period (for common stock) or for at least 90 days during a corresponding 181-day period. Also, the corporation paying the dividend must either be American or at least have stock readily tradable in American securities markets. See also: Ordinary dividend.

qualifying dividends

The dividends that meet Internal Revenue Service regulations for exclusion or partial exclusion from federal income taxation. For example, corporations are permitted to exclude a portion of all of the qualifying dividends received from stock owned in domestic corporations. There are no qualifying dividends for calculating individual income taxes.
References in periodicals archive ?
These dividends qualify as eligible dividends in Canada and qualifying dividends in the United States.
"The tax rate on capital gains and qualifying dividends is about 45% lower than the tax rate on ordinary income," he writes.
This is because traditional IRA withdrawals are taxed at ordinary income rates, regardless of whether the underlying asset would be accorded more favorable tax treatment, such as reduced rates on long-term capital gains or qualifying dividends, or even tax-free interest on municipal bonds.
Allowing the 85-percent deduction lowers the effective tax rate on qualifying dividends for corporations taxed at the highest rate from 35 percent to 5.25 percent [15 percent of taxable dividends X 35 percent].
Section 3 provides rules for identifying cash dividends and qualifying dividends, (3) and for translating certain qualifying dividends.
Thus, prior to the 2004 Act, a CFC that was also a FPHC could not pay qualifying dividends, whereas a CFC that was also a PFIC, but not a FPHC could do so.
The deduction is applied to "qualifying dividends to the extent not otherwise allowed as a deduction or eliminated from income."
(1) For 2008 only, the tax rate on qualifying dividends for individuals in the 15% or 10% bracket is reduced to zero.
The taxation of dividends received by companies is to a large extent covered by an existing Directive (the Parent-Subsidiary Directive - 90/435/EEC) which provides for exemption of withholding taxes on the payment of qualifying dividends and credit or exemption in the hands of the company receiving them).
Also, for many taxpayers who claimed the Chin lax Credit last year, the Treasury mailed checks as an advance payment of the credit's increase, The new tax law also lowered the tax rates for long term capital gains and qualifying dividends, allowing taxpayers to reduce their estimated tax payments for the year following May 2003.
In addition to changing the rates on ordinary income, the 2003 act lowers long-term capital gains rates, reduces the tax on qualifying dividends, increases the child tax credit and provides marriage penalty relief.