No. of Recommendations: 1
On your federal taxes, you report interest and dividends in separate places. There is a definite distinction.
If you own a bond mutual fund, the fund may pay dividends, representing the interest collected from the bonds the fund owns. That is a point where it can get confusing.
I don't own bond mutual funds.
Interest is obligatory.
Dividends are optional, and are declared by a board of directors.

Under current tax laws, qualified dividends are taxed at a lower rate than interest, so $1 of dividends is actually worth somewhat more to you than $1 in interest.

Best wishes, Chris
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