Taxation of dividend is according to the type of dividend and the income level of the investor. They are divided into two major categories such as qualified and ordinary (non-qualified) dividends. Qualified dividends pay less capital gains tax rates whereas ordinary dividends are subject to tax as ordinary income. The tax rate will also be in relation to the investor and the tax bracket and the local tax regulations. The taxation of dividends is usually on a year to year basis. The investors are required to declare dividend income in their tax returns though the dividend might be not distributed. How Are Dividends Taxed
