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Video: Guide to Schedule B: Interest and Dividend Income

Updated for Tax Year 2016


OVERVIEW

Did you earn more than $1,500 in interest or dividend income? Or cash in a U.S. savings bond? You may be able to exclude some of this interest from your 1099-INT form. Watch this video to find out more about Interest and Dividend income.


Hello, I'm Jill from TurboTax, with important news for taxpayers who earn interest or dividend income.

Did you receive a 1099-DIV or 1099-INT form this year? If so, you may need to file a Schedule B with your tax return.

The Internal Revenue Service requires a Schedule B form in a number of situations, but for the average taxpayer, the two most common reasons are earning more than $1,500 of interest or dividend income (from savings accounts or stocks, for example) and to exclude the interest you earn on certain U.S. savings bonds from your tax return.

The Schedule B has three sections: interest, ordinary dividends and foreign accounts and trusts. To complete the interest section, you need to separately report the name of each institution that sends you a 1099-INT form and the amount of interest it reports. For example, if you have a savings account, your bank will send you a 1099-INT by January 31 with your annual interest earnings reported in box 1. And if you cash in any type of U.S. savings bond, you will receive an additional 1099-INT that reports the bond interest in box 3.

If you use the proceeds of a series EE or I U.S. savings bond to finance your education or the education of a spouse or dependent, you may be eligible to exclude some of the interest from your taxable income. However, you will need to calculate the amount of interest you can exclude on Form 8815 before reporting the excluded interest on Schedule B.

You report dividends on Schedule B in the same way as interest, but instead, you transfer the payor information and the total ordinary dividend payments reported in box 1a from each 1099-DIV you receive. Although you must prepare a Schedule B when the combined total of interest and ordinary dividend income you earn is greater than $1,500, reporting more than $1,500 in either the dividend or interest sections of Schedule B requires you to complete the foreign accounts and trusts section, which asks a number of questions about the foreign financial accounts you have an interest in, if any.

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


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