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Q: How do I find out which companies are paying qualified dividends and how much they will be?
A: Not all dividends are created equal. Dividends are the periodic cash payments made by companies. But as you point out, some dividends are considered "qualified" and win preferential tax treatment; they are taxed at the same reduced rate as capital gains. Other dividends are non-qualified and are taxed as ordinary income. You can read more here about the difference between qualified and non-qualified dividends. Generally, most of the dividends you get from large U.S.-based companies that are not in the real-estate business are qualified. The only time you might see some non-qualified dividends would be if you invest in foreign companies or in real-estate investment trusts called REITs or in mutual funds or exchange-traded funds that invest in REITs. The best way to know what qualified dividends are is by understanding what they are not. According to The Ernst & Young Tax Guide 2009, a dividend is not qualified if it is: Again, if you're investing in a U.S. based for-profit company that's not a REIT, the dividend will most likely be qualified. If you are in doubt, you can always call the company's investor relations office and ask. If you're investing in a foreign company or REIT mutual fund or ETF, it's a good idea to check to see what percentage of the dividends are non-qualified. This information is usually available at the mutual fund or ETF provider's website. Finally, at tax time you don't need to concern yourself about which dividends are qualified and which aren't. Your broker or mutual fund company will tell you on your 1099 form how to classify your dividends for tax purposes. Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns. Follow Matt on Twitter at: twitter.com/mattkrantz
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