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What is a Schedule B IRS Form?

Updated for Tax Year 2016


OVERVIEW

If you received more than $1,500 in interest or dividend income, chances are you will need to file a Schedule B. Here are the details.


Introduction

Schedule B reports the interest and dividend income you receive during the tax year. However, you don’t need to attach a Schedule B every year you earn interest or dividends. It is only required when the total exceeds certain thresholds. In 2015 for example, a Schedule B is only necessary when you receive more than $1,500 of taxable interest or dividends.

Taxable interest income

Most types of interest you earn are subject to federal income tax. This includes the interest you earn in a bank savings account or from corporate bonds you invest in. However, if you earn interest on Series I or EE savings bonds issued after 1989 or from certain municipal bonds, you can exclude this income from your tax return and the Schedule B.

Generally, the bank or entity paying the interest will report the taxable interest to you on a Form 1099-INT. You can use this information to determine whether you need to complete Schedule B, and if so, your 1099 provides all the essential information you need to fill it out.

Taxable ordinary dividends

Ordinary dividends are distributions of property that a corporation pays to shareholders when it is profitable. Not every stock you own will pay dividends, but if it does, that income is also taxable. For the typical investor, a dividend is usually a cash payment. When your annual dividends exceed the IRS reporting threshold, then you must report them on Schedule B. In addition to the amount of dividends you receive, you must also provide the name of each company that is paying it. Each corporation that sends you a dividend payment will also report your annual total on a Form 1099-DIV. Your 1099-DIV form provides sufficient information for you to prepare the Schedule B.

Foreign accounts and trusts

The final section of Schedule B is where you must disclose any foreign bank or investment accounts you have and whether you receive distributions from certain foreign trusts. If you have sufficient dividends or interest requiring you to fill out Schedule B, then you must answer these questions. If you answer affirmatively to any question, you may have to fill out Form TD F 90-22.1.

Transferring totals to your tax return

If you earn $1,500 or less in total interest and dividend income during the year, you still have to pay tax on those amounts even though you don’t file a Schedule B. Enter the total amount of dividend and interest payments from your 1099s directly on the appropriate line of your personal income tax return.

When you do complete a Schedule B, there should be no difference in the amount of dividend and interest income on your 1099s and the schedule. Therefore, you should double check that the amounts your report on your return match what you report on Schedule B.

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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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