Were there any changes to the federal tax rate for reporting ordinary income and capital gains during 2010?
A. Yes. Qualified dividends will still be taxed at a maximum rate of 15%; however, for 2008 through 2010 taxpayers in the 10% or 15% federal rate brackets will have qualified dividends taxed at 0%. Qualified dividends are dividends received from most domestic corporations and certain foreign corporations. A mutual fund may flow through to its shareholders the qualified dividends it receives from its investment in equity securities. Box 1a of Form 1099-DIV reports the amount of total ordinary dividends received, Box 1b reports the portion of total ordinary dividends that are qualified dividends. Please note that you should still report this information, even though the tax rate is 0%.
