Both qualified and unqualified dividends are included on a tax return, but they are treated differently for tax purposes. Ordinary dividends are the most common dividend paid by stocks and mutual funds that invest in stocks, and represent payments to the stockholder from a company’s earnings and profits. Ordinary dividends can be either qualified or unqualified. Unqualified dividends include dividends from regular dividend-paying stocks that are not held by the investor for a certain required holding period, as well as dividends from most real estate investment trusts (REITs), employee stock option plans, tax-exempt companies, and mutual funds that invest in fixed income products (including money market mutual funds). The holding period for a stock dividend to be a qualified dividend, for an otherwise qualifying stock, is 61 or more days out of the 121 day period that starts 60 days before the stock’s ex-dividend date (for preferred stocks, the holding period is 91 days out of the 181 day period starting 90 days before the ex-dividend date). Unqualified dividends are taxed as ordinary income at the tax filer’s tax rate based on their overall income. Tax rates for qualified dividends are also based on the taxpayer’s income, but are lower, in line with capital gains tax rates, which are currently either 0%, 15%, or 20%. For 2023, the breakpoints on qualified dividends for an individual tax filer are 0% up to $41,675 in taxable income, then 15% to $459,750, then 20%. For those married and filing jointly, the breakpoints are 0% up to 83,350, then 15% to $517,200, then 20%, so there is a marriage penalty on qualified dividend taxation for those married and filing jointly if their combined income is more than $459,750.