How are dividends taxed?

Qualified dividends — paid by US corporations or qualified foreign corporations on stock held long enough — are taxed at the favorable long-term capital gains rates (0%, 15%, or 20%). Ordinary dividends, including most dividends from REITs and short-held stock, are taxed at your regular income rate. Your brokerage reports dividends on Form 1099-DIV, with Box 1a (total) and Box 1b (qualified) clearly separated.