Inside non-qualified accounts, capital gains are taxed when realized and dividends are taxed when paid.
Capital gains are categorized as either short-term or long-term:
- Short-term capital gains apply to assets that were held less than 1 year. Short-term gains are taxed as ordinary income.
- Long-term capital gains apply to assets that were held for 1 year or more. Long-term capital gains are taxed at favorable rates.
Dividends are categorized as either ordinary or qualified:
- Ordinary dividends are a share of a company’s profits passed onto a shareholder and are taxed as ordinary income.
- Qualified dividends are dividends that meet specific criteria and are taxed at favorable rates.
Refer to the 2024 Tax Reference Guide located in the "resources" tab for current income tax rates along with long-term capital gain and qualified dividend tax rates.
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