Federal Form 1040 Schedule B Instructions
For the latest information about developments
related to Schedule B (Form 1040A or 1040) and its
instructions, such as legislation enacted after they
were published, go to www.irs.gov/scheduleb.
Purpose of Form
Use Schedule B if any of the following applies.
- You had over $1,500 of taxable interest or ordinary
- You received interest from a seller-financed
mortgage and the buyer used the property as a
- You have accrued interest from a bond.
- You are reporting original issue discount (OID) in
an amount less than the amount shown on Form
- You are reducing your interest income on a bond
by the amount of amortizable bond premium.
- You are claiming the exclusion of interest from
series EE or I U.S. savings bonds issued after 1989.
- You received interest or ordinary dividends as a
- You had a financial interest in, or signature
authority over, a financial account in a foreign
country or you received a distribution from, or were
a grantor of, or transferor to, a foreign trust. Part III
of the schedule has questions about foreign
accounts and trusts.
TIP. You can list more than one payer on
each entry space for lines 1 and 5, but
be sure to clearly show the amount paid
next to the payer's name. Add the
separate amounts paid by the payers
listed on an entry space and enter the total in the
"Amount" column. If you still need more space, attach
separate statements that are the same size as the
printed schedule. Use the same format as lines 1 and
5, but show your totals on Schedule B. Be sure to put
your name and social security number (SSN) on the
statements and attach them at the end of your return.
Part I. Interest
Line 1. Report on line 1 all of your taxable interest.
Taxable interest should be shown on your Forms
1099-INT, Forms 1099-OID, or substitute
statements. Include interest from series EE, H, HH,
and I U.S. savings bonds. List each payer's name
and show the amount. Do not report on this line any
tax-exempt interest from box 8 or box 9 of Form
1099-INT. Instead, report the amount from box 8 on
line 8b of Form 1040A or 1040. If an amount is
shown in box 9 of Form 1099-INT, you generally
must report it on line 12 of Form 6251. See the
Instructions for Form 6251 for more details.
Seller-financed mortgages. If you sold your
home or other property and the buyer used the
property as a personal residence, list first any
interest the buyer paid you on a mortgage or other
form of seller financing. Be sure to show the buyer's
name, address, and SSN. You must also let the
buyer know your SSN. If you do not show the
buyer's name, address, and SSN, or let the buyer
know your SSN, you may have to pay a $50 penalty.
Nominees. If you received a Form 1099-INT that
includes interest you received as a nominee (that is, in
your name, but the interest actually belongs to
someone else), report the total on line 1. Do this even
if you later distributed some or all of this income to
others. Under your last entry on line 1, put a subtotal
of all interest listed on line 1. Below this subtotal, enter
"Nominee Distribution" and show the total interest
you received as a nominee. Subtract this amount from
the subtotal and enter the result on line 2.
TIP. If you received interest as a nominee,
you must give the actual owner a Form
1099-INT unless the owner is your
spouse. You must also file a Form 1096
and a Form 1099-INT with the IRS. For
more details, see the General Instructions for Certain
Information Returns and the Instructions for Forms
1099-INT and 1099-OID.
Accrued interest. When you buy bonds between
interest payment dates and pay accrued interest to
the seller, this interest is taxable to the seller. If you
received a Form 1099 for interest as a purchaser of a
bond with accrued interest, follow the rules earlier
under Nominees to see how to report the accrued
interest. But identify the amount to be subtracted as
Original issue discount (OID). If you are reporting
OID in an amount less than the amount shown on
Form 1099-OID, follow the rules earlier under
Nominees to see how to report the OID. But identify
the amount to be subtracted as "OID Adjustment."
Amortizable bond premium. If you are reducing your
interest income on a bond by the amount of amortizable
bond premium, follow the rules earlier under Nominees
to see how to report the interest. But identify the amount
to be subtracted as "ABP Adjustment."
Line 3. If, during 2014, you cashed series EE or I
U.S. savings bonds issued after 1989 and you paid
qualified higher education expenses for yourself,
your spouse, or your dependents, you may be able
to exclude part or all of the interest on those bonds.
See Form 8815 for details.
Part II. Ordinary Dividends
TIP. You may have to file Form 5471 if, in
2014, you were an officer or director of
a foreign corporation. You may also
have to file Form 5471 if, in 2014, you
owned 10% or more of the total
(a) value of a foreign corporation's stock, or (b)
combined voting power of all classes of a foreign
corporation's stock with voting rights. For details,
see Form 5471 and its instructions.
Line 5. Report on line 5 all of your ordinary
dividends. This amount should be shown in box 1a
of your Forms 1099-DIV or substitute statements.
List each payer's name and show the amount.
Nominees. If you received a Form 1099-DIV that
includes ordinary dividends you received as a
nominee (that is, in your name, but the ordinary
dividends actually belong to someone else), report
the total on line 5. Do this even if you later
distributed some or all of this income to others.
Under your last entry on line 5, put a subtotal of all
ordinary dividends listed on line 5. Below this
subtotal, enter "Nominee Distribution" and show the
total ordinary dividends you received as a nominee.
Subtract this amount from the subtotal and enter the
result on line 6.
TIP. If you received dividends as a nominee,
you must give the actual owner a Form
1099-DIV unless the owner is your spouse.
You must also file a Form 1096 and a Form
1099-DIV with the IRS. For more
details, see the General Instructions for Certain
Information Returns and the Instructions for Form
Part III. Foreign Accounts and
TIP. Regardless of whether you are required
to file FinCEN Form 114 (FBAR), you
may be required to file Form 8938,
Statement of Specified Foreign
Financial Assets, with your income tax
return. Failure to file Form 8938 may result in
penalties and extension of the statute of limitations.
See www.irs.gov/form8938 for more information.
Line 7a-Question 1. Check the "Yes" box if at any
time during 2014 you had a financial interest in or
signature authority over a financial account located
in a foreign country. See the definitions that follow.
Check the "Yes" box even if you are not required to
file FinCEN Form 114, Report of Foreign Bank and
Financial Accounts (FBAR).
Financial account. A financial account includes,
but is not limited to, a securities, brokerage, savings,
demand, checking, deposit, time deposit, or other
account maintained with a financial institution (or
other person performing the services of a financial
institution). A financial account also includes a
commodity futures or options account, an insurance
policy with a cash value (such as a whole life
insurance policy), an annuity policy with a cash
value, and shares in a mutual fund or similar pooled
fund (that is, a fund that is available to the general
public with a regular net asset value determination
and regular redemptions).
Financial account located in a foreign country. A financial account is located in a foreign country if
the account is physically located outside of the
United States. For example, an account maintained
with a branch of a United States bank that is
physically located outside of the United States is a
foreign financial account. An account maintained
with a branch of a foreign bank that is physically
located in the United States is not a foreign financial
Signature authority. Signature authority is the
authority of an individual (alone or in conjunction
with another individual) to control the disposition of
assets held in a foreign financial account by direct
communication (whether in writing or otherwise) to
the bank or other financial institution that maintains
the financial account. See the FinCEN Form 114
instructions for exceptions. Do not consider the
exceptions relating to signature authority in
answering Question 1 on line 7a.
Other definitions. For definitions of "financial
interest," "United States," and other relevant terms,
see the instructions for FinCEN Form 114.
Line 7a-Question 2. See FinCEN Form 114 and its
instructions to determine whether you must file the
form. Check the "Yes" box if you are required to file
the form; check the "No" box if you are not required
to file the form.
If you checked the "Yes" box to Question 2 on line
7a, FinCEN Form 114 must be electronically filed
with the Financial Crimes Enforcement Network
(FinCEN) at the following website: http://bsaefiling.
fincen.treas.gov/main.html. Do not attach FinCEN
Form 114 to your tax return. To be considered
timely, FinCEN Form 114 must be received by June
CAUTION. If you are required to file FinCEN Form
114 but do not properly do so, you may
have to pay a civil penalty up to
$10,000. A person who willfully fails to
report an account or provide account
identifying information may be subject to a civil
penalty equal to the greater of $100,000 or 50
percent of the balance in the account at the time of
the violation. Willful violations may also be subject to
Line 7b. If you are required to file FinCEN Form 114,
enter the name of the foreign country or countries in
the space provided on line 7b. Attach a separate
statement if you need more space.
Line 8. If you received a distribution from a foreign
trust, you must provide additional information. For
this purpose, a loan of cash or marketable securities
generally is considered to be a distribution. See
Form 3520 for details.
If you were the grantor of, or transferor to, a
foreign trust that existed during 2014, you may have
to file Form 3520.
Do not attach Form 3520 to Form 1040. Instead,
file it at the address shown in its instructions.
If you were treated as the owner of a foreign trust
under the grantor trust rules, you are also
responsible for ensuring that the foreign trust files
Form 3520-A. Form 3520-A is due on March 16,
2015, for a calendar year trust. See the instructions
for Form 3520-A for more details.