For dividends to fall in the qualified dividend category (and receive the special treatment), they must be paid by a U.S. corporation or a qualifying foreign corporation. You must also meet the holding period requirement. The holding period requirement states you must have held the investment for more than 60 days during the 121-day period that starts 60 days prior to the ex-dividend date.
Certain dividend payments aren't qualified dividends even if they're reported as such. These are listed in IRS publication 550 under the "Dividends that are not qualified dividends" section, and they include capital gains distributions.
Ordinary dividends are the total of all the dividends reported on a 1099-DIV form. Qualified dividends are all or a portion of the total dividends. They're reported in box 1a on Form 1099-DIV.
Some types of capital gains, such as profits from the sale of a stock that you have held for a long time, are generally taxed at a more favorable rate than your salary or interest income. However, not all capital gains are treated equally. The tax rate can vary dramatically between short-term and long-term gains. For a detailed comparison between the two, please see A Guide to the Capital Gains Tax Rate: Short-term vs. Long-term Capital Gains Taxes
Also, see Your Guide to Taxes on Dividends
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