Who needs to fill out IRS Form Schedule B?

By Amy Fontinelle AAA
A:

Taxpayers who receive more than $1,500 in taxable interest and/or ordinary dividends during the year are required to fill out IRS Form Schedule B, which accompanies IRS form 1040. Schedule B requires the taxpayer to provide the name of each payer (such as an investment firm or bank) and the amount of interest or dividends received from each payer. The information taxpayers must report on form Schedule B is typically reported to the IRS by the payer, with a copy sent to the taxpayer, using form 1099-INT for interest and form 1099-DIV for dividends. Taxpayers must report the interest and dividends they receive to the IRS because these sources of income are taxable.

Other, less common reasons why taxpayers might need to fill out a Schedule B include the following:

  • To report interest income received from a seller-financed mortgage where the borrower uses the property as their personal residence.
  • To report accrued bond interest.
  • To report a bond’s original issue discount in an amount less what is reported on Form 1099-OID.
  • To reduce interest income on a bond by the amount of the bond’s amortizable premium.
  • To claim an exclusion of interest from series EE or series I U.S. savings bonds issued after 1989.
  • To report interest or ordinary dividends received as a nominee (on behalf of someone else).
  • To report a financial interest in, or signature authority over, a foreign account.
  • To report a distribution from, being grantor of, or transferor to, a foreign trust.

Schedule B should not be used to report any tax-exempt interest shown on form 1099-INT; that information should be reported on form 1040.

Tax software can simplify the process of determining whether Schedule B is required and completing the form correctly if it is required. The totals from Schedule B are transferred to form 1040, where they are included in the computation of taxable income.

Some of the circumstances that require a taxpayer to file Schedule B also require the filing of other forms. For example, taxpayers with foreign accounts or trusts may be required to submit Form 8938, Statement of Specified Foreign Financial Assets.

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