How to Fill Out and Submit IRS Schedule B (Form 1040)

To fill out Schedule B on Form 1040, list each payer of taxable interest in Part I, list each payer of ordinary dividends in Part II, answer the yes-or-no questions about foreign accounts and trusts in Part III, then carry the interest total to Form 1040 line 2b and the dividend total to line 3b.¹ Most of the work is transcription from your 1099s. The parts that trip people up are the adjustments in Part I and the foreign-account questions in Part III.

Do You Actually Need Schedule B?

You must file Schedule B if your taxable interest was more than $1,500 or your ordinary dividends were more than $1,500. The $1,500 test applies to each category on its own, not combined.²

You also need the schedule, even below $1,500, in any of these situations:³

You are receiving mortgage interest from a buyer who uses the property as a personal residence (a seller-financed mortgage).
You received interest or dividends in your name that actually belong to someone else (nominee income).
You are excluding interest on Series EE or I savings bonds used for qualified higher education expenses, calculated on Form 8815.⁴
You had a financial interest in or signature authority over a foreign financial account, or you had a reportable relationship with a foreign trust.²

If none of that describes you and both categories are at or under $1,500, skip the schedule and put your totals straight on Form 1040 lines 2b and 3b.

What to Have in Front of You

The forms you will copy from are Form 1099-INT for interest and Form 1099-DIV for dividends, sent by financial institutions by the end of January. If you own bonds bought at a discount, expect a Form 1099-OID as well.⁵ Brokerages sometimes issue corrected 1099s into February or March, so check the version date before you start typing.

For a seller-financed mortgage, you also need the buyer’s name, address, and Social Security number. The IRS can charge a $50 penalty if that information is missing from the schedule.³

Part I: Interest Income

Part I is a two-column list. On line 1, put each payer’s name on the left and the interest amount on the right, taken from your 1099-INT and 1099-OID forms. If a brokerage sent you a consolidated statement, list the brokerage’s name once with the total interest shown.⁵

If you have a seller-financed mortgage, that entry goes first: buyer’s name, address, and SSN, followed by the interest they paid you.³ Run out of lines? Attach a separate sheet in the same two-column format, put your name and SSN at the top, and carry only the totals to Schedule B.

Total everything on line 2. If you are claiming the savings bond education exclusion, enter the excludable amount from Form 8815 on line 3 and subtract. Line 4 is the final interest number, and it goes on Form 1040 line 2b.¹

Adjustments Inside Part I

Several situations require you to report the full 1099 amount and then subtract part of it back out. The mechanic is the same each time: list the full amount on line 1, write a subtotal, then enter the reduction on a separate line below with a specific label, and use the net figure going forward.³

Nominee interest belongs on your 1099 but is really someone else’s. Label the subtraction “Nominee Distribution.” You also have to issue a 1099-INT to the real owner so the IRS can match the income correctly.
Accrued interest applies when you bought a bond between payment dates and part of the coupon really belonged to the seller. Label it “Accrued Interest” and subtract what you paid the seller at purchase.
Amortizable bond premium comes up when you paid over face value for a taxable bond and elected to amortize. Label the subtraction “ABP Adjustment.”
OID adjustments apply when the taxable original issue discount is less than what your 1099-OID shows. Label it “OID Adjustment.” If the payer already netted this on the 1099, do not subtract again.

Part II: Ordinary Dividends

Part II works the same way. On line 5, list each payer and the ordinary dividend amount from box 1a of Form 1099-DIV.⁵ Consolidated brokerage statements can be entered as a single line with the total. Add the amounts on line 6 and put that number on Form 1040 line 3b.¹

Qualified dividends are not broken out on Schedule B. They come from box 1b of your 1099-DIV and go directly on Form 1040 line 3a.

The nominee adjustment works in Part II the same way it works in Part I: report the full amount, subtotal, subtract the nominee’s share labeled “Nominee Distribution,” and file a 1099-DIV in the actual owner’s name.⁵

Part III: Foreign Accounts and Trusts

Part III is not a list of income. It is a set of yes-or-no questions about your relationship with foreign accounts and foreign trusts, and you have to answer them whether or not those accounts produced any income.

Line 7a asks two things. First, did you have a financial interest in, or signature authority over, a financial account in a foreign country at any time during the year? Signature authority means you could direct money in the account by contacting the institution, even if you never did. Second, are you required to file FinCEN Form 114, the Report of Foreign Bank and Financial Accounts (the FBAR)?³ If you answer yes on 7a, line 7b asks you to name each country where you hold an account. Line 8 asks whether you received a distribution from, or were a grantor of or transferor to, a foreign trust.

What a “Yes” in Part III Means Next

Checking yes on Part III often triggers filings that are separate from your tax return. The FBAR is required whenever the combined value of your foreign accounts exceeded $10,000 at any point during the year. It is filed electronically through FinCEN’s BSA E-Filing system, with an April 15 deadline and an automatic extension to October 15.⁶

You may also owe Form 8938 under FATCA if your foreign assets cross higher thresholds. For unmarried taxpayers living in the U.S., the trigger is foreign assets worth more than $50,000 on the last day of the year or more than $75,000 at any point during the year. For married joint filers, those figures are $100,000 and $150,000.⁷ Form 8938 is attached to your tax return; the FBAR is not.

Attaching Schedule B to Your Return

E-filing software attaches Schedule B automatically. If you are filing on paper, place Schedule B directly behind your Form 1040 or 1040-SR.¹

How Long to Keep Your Records

Keep your completed Schedule B, all 1099s, and any supporting worksheets for at least three years from the date you filed, which is the standard window for the IRS to assess additional tax. If you underreported gross income by more than 25 percent, the window stretches to six years.⁸ Foreign-account records are worth holding onto longer given the size of possible FBAR penalties.

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Internal Revenue Service. Schedule B (Form 1040) 2025 – Interest and Ordinary Dividends
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Internal Revenue Service. About Schedule B (Form 1040), Interest and Ordinary Dividends
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Internal Revenue Service. Instructions for Schedule B (Form 1040)
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Internal Revenue Service. Form 8815 – Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989
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Internal Revenue Service. Instructions for Schedule B (Form 1040)
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FinCEN.gov. Report Foreign Bank and Financial Accounts
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Internal Revenue Service. Summary of FATCA Reporting for U.S. Taxpayers
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Internal Revenue Service. Topic No. 305, Recordkeeping