 Obviously, software is useful and helpful in this situation as well. Line 3B, ordinary dividends. Each payer should send you a form 1099DIV. So that's going to be the financial institution giving you your 1099DIV that you're investing with. Enter your total ordinary dividends on line 3B. This amount should be shown in box 1A of forms 1099DIV. You should fill in and attach Schedule B if total is over 1500 or you received as a nominee ordinary dividends that actually belong to someone else. So we talked about that second situation in a similar fashion when we looked at the interest. The basic idea, the Schedule B includes what we might think of as usually oftentimes passive types of income, income from investments for example, interest and dividends. If the amount goes over 1500 then the IRS wants you not only to report it on the first page of the form 1040 but also to include that Schedule B. So non-dividend distributions. Some distributions are a return of your cost or other basis. They won't be taxed until you recover your cost or other basis. You must reduce your cost or other basis by these distributions after you get back all of your cost or other basis. You must report these distributions as capital gains on form 8449 for Detail C Publication 550. So when we think about, this is where you might see something on that 1099DIV that is under like capital gain distributions because when something is distributed from the corporation as dividends, it's coming out of what they call the retained earnings. That's what we assume it's coming from. So corporations instead of having to differentiate their value based on say a partnership, having different partnership capital accounts that represent the ownership value in the corporation, it's broken out in terms of the earnings that have been retained which haven't been distributed in the form of dividends and then the amount of the value of the corporation that we're applying to the investments in the corporation from the original issuance of the shares when they actually issued the shares from the corporation. So if the money is coming out of retained earnings, then it's a normal dividend. But if you're saying, well, it's now dipping into not just the retained earnings, but a return of the capital, the owner's investment in the corporation through the original issuance of the stock. That's when it might be something other than a dividend distribution kind of in theory. And so then it might be a capital gain type of situation where you might have to think, okay, maybe I have to compare that to how much I paid into the distribution or possibly report it on schedule D in some way, shape or form in a similar way as if I kind of like sold the stock, right? Because they're actually giving me my value back, they're dipping into the investment as opposed to the earnings of the corporation. Okay. So tips. So that sounds kind of complicated, by the way, when I kind of talk it through this way. But usually it's pretty straightforward to enter into the tax return because you'll be able to see a data input form for the gain distributions and you can put that in there. And the tax software will usually be able to calculate that. You might have to report capital gains on it. You want to be able to kind of explain that to some degree to yourself and to a client as to why you have something in dividend distributions and why they broke some of it out into these other boxes like a capital gain. So tip. Dividends on insurance policies are a partial return of the premiums you paid. Don't report them as dividends. Include them in income on schedule 1, line 8, Z, only if they exceed the total of all net premiums you paid for the contract. So here's going to be the dividend rates here. So notice we have different dividend rates if we qualify for the preferential ordinary dividends. I'm sorry, the qualified dividends. And that usually happens if they're like a US entity, corporation entity. So then we might qualify and say, OK, now they're a qualified dividend. If that is the case, then we're going to have these preferential rates. So if we're single, we're reading the table zero up to 41,675, the rate's going to be zero. If we're single and we're 41,676 up to 459,750 of AGI taxable income in essence, our income, then the AGI adjusted gross income generally, then we're at the 15%. And that's usually going to be what they're trying to do is give a preferential tax rate compared to the ordinary income tax rate, which is difficult to do because ordinary income is already on a progressive tax system with different tax rates. So they're trying to say, I'm trying to say or come up with a structure where these qualified dividends are going to be taxed at a lower rate. But I can't just pick one rate because people are already being taxed at the progressive rate, so it'll depend on what your ordinary income tax is basically on average to try to give you a more preferential tax rate for the qualified dividends. So if your income is higher than it would be at 20%, which would be a good percent. If they just put it at 20%, then it would actually be a detriment to lower income people to invest and generate dividends because their average tax rate is not going to be 20%. So now they have to come with this kind of progressive tax system to try to get a more favorable rate so they can incentivize people investing generally in US corporate stocks and so on and the ride goes on. Obviously those thresholds change here, so you might not kind of memorize this table, but your general idea might be, look, if you're investing and you have qualified dividends, then you might have a favorable rate in comparison to your ordinary income rates, that's the point which will be calculated when you calculate the tax. So now the tax is being calculated using a progressive tax system and this more favorable rate which is applied just to the income that is the qualified dividend income. We'll dive into that a little bit more on how that actually might work with an example using tax software in a following presentation.