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.

RELATED FAQS
  1. What’s the difference between IRS Forms 1040 and 1040EZ?

    Though very similar, the differences between the 1040 and 1040EZ Forms are significant when it comes to filing your tax return. ... Read Answer >>
Related Articles
  1. Taxes

    The Purpose Of 1099 Forms

    The need for 1099 forms and why you must track the income reported on them. If you don't, the IRS will find it anyway and go after you – a costly mistake.
  2. Taxes

    Reporting Your Interest Income

    Find out how your accounts are taxed and which forms you need.
  3. Insights

    6 Tax Forms for Investors Who Have Money Abroad

    If you're a U.S. citizen or resident, and you own assets in other countries, you might need to file these six forms with the government.
  4. Taxes

    What's IRS Form 1040 For?

    Most U.S. taxpayers will be familiar with the 1040. By the end of filling it out, you'll know how much tax you owe, or what your refund is.
  5. Taxes

    20 Tax Changes You Need To Know About

    Don't miss out on the tax changes. Here's a list that you need to know about.
  6. Managing Wealth

    How & Where to File Form 1040 (And Which Version)

    All taxpayers need to know three things when filing a 1040: which form to use, how to file and where to file. After reading this, you'll know all three.
  7. Taxes

    What IRS Form 990 Tells About a Nonprofit

    Want a picture of an organization's activities? This annual form, open to the public, sums up everything from salaries paid to missions accomplished.
  8. Taxes

    Why People Don't Lie On Their Tax Returns

    Studies show people are overwhelmingly truthful when it comes to their tax filing, even when lying would benefit them.
  9. Taxes

    Start Over With The IRS

    If you're struggling to pay back taxes, try a fresh start with the IRS. They really can help.
RELATED TERMS
  1. Form 1099-INT

    The form issued by all payers of interest income to investors ...
  2. Form 8949

    An Internal Revenue Service form implemented in tax year 2011 ...
  3. Form 3903

    A tax form distributed by the Internal Revenue Service (IRS) ...
  4. Schedule D

    A U.S. income tax form used by taxpayers to report their realized ...
  5. Form 1098

    Form 1098 is a form filed with the Internal Revenue Service (IRS) ...
  6. IRS Publication 538

    A document published by the Internal Revenue Service (IRS) that ...
Hot Definitions
  1. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  2. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  3. Absolute Advantage

    The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost ...
  4. Nonce

    Nonce is a number added to a hashed block, that, when rehashed, meets the difficulty level restrictions.
  5. Coupon

    The annual interest rate paid on a bond, expressed as a percentage of the face value. It is also referred to as the "coupon ...
  6. Socially Responsible Investment - SRI

    Socially responsible investing looks for investments that are considered socially conscious because of the nature of the ...
Trading Center