# Taxes in plain words: dividends, interest and gains > Tell dividends, interest, capital gains and return of capital apart, using the tax breakdown from a real ETF's annual report. Free, on real ETF data. Data as of Nov 10, 2026. Rebuilt every trading night. ## Taxes in plain words: dividends, interest and gains Data as of Nov 10, 2026. Rebuilt every trading night. Of every $1,000 QYLD paid out in its fund year to Oct 31, 2025 (report filed Jan 9, 2026 ), $760.80 was ordinary income and $123.50 return of capital. Money Basics · Lesson 5 of 7 1 2 3 4 5 6 7 Pick an amount. See how a payout from QYLD would split by its annual report. Cash paid to you $1,000 On $1,000: Ordinary income $761, Long-term gains $116, Return of capital $124. Hypothetical amount. QYLD's annual report for the year to Oct 31, 2025, filed Jan 9, 2026. ### The question "My fund paid me money. Is all of it taxed the same way? And what are dividends, interest and gains, anyway?" ### The idea - Money from a fund reaches you in a few forms, and tax rules treat each one differently. Four words cover almost all of it: - Dividends: a share of company profits, paid to the company's shareholders. - Interest: what a borrower pays you for lending money. Bond and cash funds earn mostly interest. - Capital gains: profit when something sells for more than it cost. Held over a year, the gain is long-term ; a year or less, short-term . Long-term gains are usually taxed at lower rates. - Return of capital: some of your own money handed back. It isn't profit, so it usually isn't taxed when paid. Instead it lowers what you're counted as having paid, which can mean a bigger taxable gain when you sell. - Interest and most short-term gains are taxed as ordinary income , like wages. Some dividends ("qualified" dividends) get the lower long-term rate. ### Worked example Each year a fund files an annual report with the SEC, the US regulator, saying what its payouts were for tax. Take QYLD , a fund that owns the Nasdaq-100 companies and earns extra cash by writing options on them: contracts that pay it now in exchange for some of the stocks' future gains. It pays out a lot: 12.2% of its price in cash over the year to Nov 10, 2026 . Step 1. Its annual report for the year to Oct 31, 2025 (filed Jan 9, 2026 ) says it paid out $1,068,251,630 in total. Step 2. The report splits that total three ways: - Ordinary income: $812,726,459 - Long-term capital gains: $123,553,342 - Return of capital: $131,971,829 Step 3. Divide each part by the total, then multiply by $1,000: - Ordinary income: 812,726,459 ÷ 1,068,251,630 = 76.08% , so $760.80 of every $1,000 - Long-term gains: 11.57% , so $115.70 - Return of capital: 12.35% , so $123.50 So of $1,000 QYLD paid you that year, about $761 was taxed like wages, $116 at the lower long-term rate, and $124 wasn't taxed when paid but lowered your cost. Step 4. Simpler cases: BIL holds Treasury bills, so its payouts are interest. SPY holds stocks, so its payouts are dividends: its latest was $ 1.8888 a share , for owners on its ex-date (the cut-off day), Sep 18, 2026 . Your own taxes depend on your account and income; these are the fund's facts, not tax advice. ### The common mistake "I reinvested my payouts, so I don't owe tax on them." In a regular (taxable) account, a payout counts in the year it's paid, even if it went straight back into the fund. The second mistake: treating return of capital as profit. It's your own money coming back. A fund paying 12% a year isn't earning you 12% if part of that is your money returned and the price falls. ### Check your understanding Pick an answer to see why. Two of three right passes the lesson. 1. A bond fund lends money to companies and passes on what they pay. What is that payout mostly? A Dividends B Interest C Return of capital D Long-term capital gains Answer: B. Interest. borrowers pay interest for the use of lent money. Not A: dividends come from owning company stock, not lending. 2. By its annual report, about what share of QYLD's payouts in the year to Oct 31, 2025 was return of capital? A 76% B 50% C 12% D 0% Answer: C. 12% . $131,971,829 ÷ $1,068,251,630 is about 12.4% . Not A: 76% was ordinary income. 3. A fund pays you $500, and its report says 20% was return of capital. Which is true? A You made $500 of profit B $100 was your own money back and lowered your cost C The whole $500 is return of capital D Return of capital is taxed as wages Answer: B. $100 was your own money back and lowered your cost. 20% of $500 is $100 of your own money. Not A: part of the $500 wasn't profit at all. ### Takeaways - Know the four kinds: dividends, interest, capital gains, return of capital. - Payouts count for tax in the year they're paid, even when reinvested in a taxable account. - Open a fund's tax block on ETFIQ to see how its payouts split. ### Do it on ETFIQ Read the tax block on your income fund Your fund ### Where to next --- Source: ETFIQ, independent ETF data. Recomputed nightly from public filings and prices. Cite: ETFIQ, Taxes in plain words: dividends, interest and gains, data as of Nov 10, 2026. https://etfiq.com/academy/money-basics/taxes-in-plain-words/ Licence: https://etfiq.com/license/ Data ETFIQ computes is free to use with attribution: ETFIQ (etfiq.com). 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