Form 1040 Schedule B - Interest And Ordinary Dividends

Form 1040 Schedule B is a supplemental form used to report interest and ordinary dividends earned by an individual during the tax year. This schedule is used to report income from various sources, including bank accounts, bonds, and stock investments.

Purpose of Schedule B

Schedule B is used to report interest and ordinary dividends that are subject to federal income tax. The schedule is divided into two parts:

• Part I: Interest
• Part II: Ordinary Dividends

Who Needs to File Schedule B?

Individuals who receive interest and ordinary dividends that exceed certain thresholds should file Schedule B along with their Form 1040. This includes individuals who:

• Receive interest from bank accounts, certificates of deposit (CDs), or bonds
• Receive ordinary dividends from stock investments
• Have investments in mutual funds or exchange-traded funds (ETFs) that generate interest or dividends

Types of Income Reported on Schedule B

Schedule B reports the following types of income:

• Interest from:
  • Bank accounts
  • Certificates of deposit (CDs)
  • Bonds (government and corporate)
  • Treasury bills
  • Mutual funds
• Ordinary dividends from:
  • Stock investments
  • Mutual funds
  • Exchange-traded funds (ETFs)

How to Complete Schedule B

To complete Schedule B, taxpayers should gather all relevant documents, including:

• 1099-INT forms for interest income
• 1099-DIV forms for dividend income
• Statements from banks, brokerages, and investment companies

Taxpayers should then report their interest and ordinary dividends on the appropriate lines of Schedule B.

Tips for Accurate Reporting

To ensure accurate reporting on Schedule B, taxpayers should:

• Review their 1099 forms carefully to ensure accuracy
• Keep accurate records of their investments and income
• Report all interest and dividend income, even if it's below the threshold for receiving a 1099 form
• Consider consulting a tax professional if they have complex investment income

In summary, the Form 1040 Schedule B is used to report interest and ordinary dividend income, providing a detailed breakdown of these types of income. Accurate completion of this schedule is essential for taxpayers who receive significant interest and dividend income, as it ensures accurate reporting and claim of deductions and credits.