What Is Schedule B (Form 1040): Interest and Ordinary Dividends?

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What Is Schedule B: Interest and Ordinary Dividends?

Individuals who receive $1,500 or more in qualified interest or dividends during the tax year must complete the Schedule B tax schedule provided by the Internal Revenue Service (IRS) and attach it to their tax return. The schedule uses information from Forms 1099-INT and 1099-DIV so the correct figures can be transferred to your 1040 tax return.

Schedule B helps taxpayers compute the income tax due on interest paid from a bond and dividends earned.

Key Takeaways

• Schedule B is an IRS tax form that must be completed if a taxpayer receives interest income and/or ordinary dividends of more than $1,500 during the tax year.
• The schedule must accompany a taxpayer's Form 1040 when it's required.
• Taxpayers can 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?

Taxpayers who are required to file taxes in the United States and who receive more than $1,500 in taxable interest and/or ordinary dividends during the year must fill out Schedule B. The schedule requires that the taxpayer 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 must be entered 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

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:

• To report interest income received from a seller-financed mortgage when the borrower uses the property as their residence
• To report accrued bond interest
• To report a bond’s original issue discount in an amount that's less than what's 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 a grantor of, or a transferor to a foreign trust

Schedule B should not be used to report any tax-exempt interest that's 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, the Statement of Specified Foreign Financial Assets.

Where Can You Get Schedule B?

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 other reasons why you may have to file this schedule include receiving interest from a seller-financed mortgage or to report a financial interest in a foreign account. The IRS website provides a full list of reasons to file Schedule B.

Be sure to include the schedule with your 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 more than $1,500 in interest or dividend income that's reported on Form 1099-INT and/or Form 1099-DIV. These forms are sent directly to you and the IRS by issuers such as banks, brokerage houses, and investment firms. You're also required to file Schedule B to inform the IRS if you have foreign account holdings.

Where Can I Find Schedule B?

You can download a copy of Schedule B directly from the IRS website. The program will also provide it for you if you file using special tax software. You'll have to enter the information on your 1099 forms into the software and it will generate a Schedule B for you.

The Bottom Line

Many taxpayers must file Schedule B simply because they've kept a bank account that credits interest on deposits. 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're included in the computation of taxable income.

1. Internal Revenue Service. "About Schedule B (Form 1040), Interest and Ordinary Dividends."
2. Internal Revenue Service. "2023 Instructions for Schedule B: Interest and Ordinary Dividends." Pages 1–3.
3. Internal Revenue Service. "2023 Instructions for Schedule B: Interest and Ordinary Dividends." Page 2.
4. Internal Revenue Service. "About Form 8938, Statement of Specified Foreign Financial Assets."
5. Internal Revenue Service. "2023 Instructions for Schedule B: Interest and Ordinary Dividends." Pages 1-2.
6. Internal Revenue Service. "About Schedule B (Form 1040), Interest and Ordinary Dividends."
7. Internal Revenue Service. "2023 Instructions for Schedule B: Interest and Ordinary Dividends." Page 1.

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