Capital Gains and Qualified Dividends
During the tough economy, investments may not necessarily have paid off. However, you may still have realized some capital gains or received a capital gains distribution from a mutual fund; you may also have received dividends from stocks and equity mutual funds. Normally, net capital gains, capital gains distributions, and qualified dividends are taxed at a top rate of 15 percent. However, for some individuals, there is no tax on this income in 2009. The same rule is scheduled to apply in 2010 but could be changed by Congress.
If you qualify, you pay no tax on net capital gains (net long-term capital gains in excess of net short-term capital losses), capital gain distributions from certain mutual funds, and qualified dividends.