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I received a long-term capital gain on a tax-exempt bond fund and it's not qualified so it's taxed at the 15% rate. Since I'am in the 15% tax bracket, I thought the rate was 5% ..... is it because it is a bond? Any help woild be great! THANKS!

A tax-exempt bond fund will typically have three kinds of dividends. There are the tax-free dividends (coming from the interest on the bonds). Ideally, this will be the bulk of the income from the fund. There can be short term capital gains (coming from the fund buying and selling bonds held for a year or less). Hopefully, there won't be much of this. On your 1099-DIV, these are reported as ordinary, non-qualified dividends. And there will be long-term capital gains (coming from the same buying and selling of bonds, just ones held for more than a year). These are reported as such on your 1099-DIV.

Long-term capital gain dividends are just that - long-term gains. They are not qualified dividends. Instead, they are reported on schedule D (or perhaps directly on your 1040 if schedule D is otherwise not required). They are not entered on schedule B. And as such, they will get the favorable tax rate for LTCGs.

--Peter
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