What Is Schedule B: Interest and Ordinary Dividends?
Schedule B is a tax schedule provided by the Internal Revenue Service (IRS) that helps taxpayers compute income tax due on interest paid from a bond and dividends earned. Individuals must complete this form and attach it to their annual tax returns if they received more than $1,500 in qualified interest or dividends. This schedule uses information from Forms 1099-INT and 1099-DIV to populate the correct figures into your 1040 tax return.
- Schedule B is an IRS tax form that must be completed if a taxpayer receives interest income and/or ordinary dividends over the course of the year of more than $1,500.
- The schedule must accompany a taxpayer's Form 1040.
- Taxpayers use information from Forms 1099-INT and 1099-DIV to complete Schedule B.
- Schedule B can be used to report less common forms of interest or corporate distributions to individuals.
- The form is also used to report any foreign account holdings.
Who Must File Schedule B: Interest and Ordinary Dividends?
As noted above, taxpayers who are required to file taxes in the United States and receive more than $1,500 in taxable interest and/or ordinary dividends during the year must fill out Schedule B. Schedule B requires the taxpayer to provide the name of each payer, such as an investment firm or bank, along with the amount of interest or dividends received from each payer.
The information that needs to be inputted on Schedule B can be found on the corresponding 1099 forms received from the issuers: a 1099-INT for interest and/or a 1099-DIV for dividends. These 1099 forms are sent to both the taxpayer and the IRS by the issuer.
Schedule B must accompany Form 1040 when taxpayers file their annual tax returns.
Taxpayers must report the interest and dividends they receive to the IRS because these sources of income are taxable.
When to File Schedule B: Interest and Ordinary Dividends
The main reason to file Schedule B is to report any interest income and ordinary dividends received from investments that exceed $1,500. But there are other, less common reasons why taxpayers might need to fill out a Schedule B. They include:
- 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 than 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. This information should be reported directly on Form 1040.
Taxpayers with foreign accounts or trusts may be required to submit Form 8938: Statement of Specified Foreign Financial Assets.
Where Can You Get Schedule B: Interest and Ordinary Dividends?
You can download a copy of Schedule B directly from the IRS website.
When Do You Have to File a Schedule B?
Schedule B is required any time you receive interest or ordinary dividends from investments that exceed $1,500. The information reported on the form is taken directly from Form 1099-INT and 1099-DIV, which are sent directly to you and the IRS by the issuers. Some of the other reasons why you need to file this schedule include any time you receive interest from a seller-financed mortgage and to report a financial interest in a foreign account, among others. The IRS website has a full list of reasons to file Schedule B. Be sure to include the schedule with Form 1040 or 1040-SR.
Where Do You Get the Information to Report on a Schedule B Form?
You must complete Schedule B if you receive interest or dividend income. Form 1099-INT and 1099-DIV. These forms are sent directly to you and the IRS by the issuers, such as banks, brokerage houses, and investment firms. You are also required to file Schedule B to inform the IRS that you have foreign account holdings.
Where Can I Find Schedule B?
You can download a copy of Schedule B directly from the IRS website. If you file using special tax software, the program will provide it for you. You'll have to input the information from your 1099 forms into the software and it will generate a Schedule B for you.
The Bottom Line
Many taxpayers need a schedule B simply from keeping a bank account that credits interest on deposits over the course of a year. Investors may also receive dividends from time to time. 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.