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.
Key Takeaways
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?
As noted above, taxpayers who are required to file taxes in the United States and receive more than $1,500 in taxable interest and/orordinary dividendsduring 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
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 Form1099-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?
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.
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 is an IRS form you use to report interest and dividend income on your tax return. Most taxpayers need to file Schedule B when they receive $1,500 or more in interest or dividend income during the year.
Enter the ordinary dividends from box 1a on Form 1099-DIV, Dividends and Distributions on line 3b of Form 1040, U.S. Individual Income Tax Return, Form 1040-SR, U.S. Tax Return for Seniors or Form 1040-NR, U.S. Nonresident Alien Income Tax Return.
Ordinary, or non-qualified, dividends are paid by corporations to shareholders of record. Dividends are considered ordinary by default unless they meet special requirements put in place by the IRS. Ordinary dividends are taxed as ordinary income, while qualified dividends are taxed at the lower capital gains rate.
It's required if you receive over $1,500 in taxable interest or ordinary dividends or have certain foreign financial interests. Completing Schedule B: Accuracy in listing each source of interest or dividends is crucial. Calculating and reporting the total interest and dividend income correctly is key to compliance.
Use Schedule B (Form 1040) if any of the following applies: You had over $1,500 of taxable interest or ordinary dividends. You received interest from a seller-financed mortgage and the buyer used the property as a personal residence. You have accrued interest from a bond.
Interest on deposit accounts, such as checking and savings accounts. Interest on the value of gifts given for opening an account. Distributions commonly known as “dividends” on deposit or share accounts in credit unions, cooperative banks, and other banking associations.
How dividends are taxed depends on your income, filing status and whether the dividend is qualified or nonqualified. Qualified dividends are taxed at 0%, 15% or 20% depending on taxable income and filing status.Nonqualified dividends are taxed as income at rates up to 37%.
For single filers, if your 2023 taxable income was $44,625 or less, or $89,250 or less for married couples filing jointly, then you won't owe any income tax on dividends earned.
Unearned Income. Unearned income includes investment-type income such as taxable interest, ordinary dividends, and capital gain distributions. It also includes unemployment compensation, taxable social security benefits, pensions, annuities, cancellation of debt, and distributions of unearned income from a trust.
Dividend per share (DPS) is the sum of declared dividends issued by a company for every ordinary share outstanding. The figure is calculated by dividing the total dividends paid out by a business, including interim dividends, over a period of time, usually a year, by the number of outstanding ordinary shares issued.
Bottom line. Let's recap: the primary difference between ordinary dividends and qualified dividends is how they are taxed. Ordinary dividends are taxed as ordinary income at your regular tax rate, while qualified dividends are taxed at a lower rate, similar to the long-term capital gains tax rate.
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.
Enter the ordinary dividends from box 1a on Form 1099-DIV, Dividends and Distributions on line 3b of Form 1040, U.S. Individual Income Tax Return, Form 1040-SR, U.S. Tax Return for Seniors or Form 1040-NR, U.S. Nonresident Alien Income Tax Return.
Whereas ordinary dividends are taxable as ordinary income, qualified dividends that meet certain requirements are taxed at lower capital gain rates. The payer of the dividend is required to correctly identify each type and amount of dividend for you when reporting them on your Form 1099-DIV for tax purposes.
When you receive Section 199A dividends, they will be reported on Form 1099-DIV in Box 5. These dividends are a subset of the total ordinary dividends reported in Box 1a. You don't need to itemize deductions to qualify for the 199A deduction. The deduction does not reduce your adjusted gross income.
Schedule B is used to determine the estate's or trust's income distribution deduction. The amount for line 18 (“Income distribution deduction”) on page 1 of the 1041 return flows from line 15 of Schedule B. Entries to Schedule B can be made on screen 4.
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