Your interest and dividends, sorted line by line

Schedule B (Form 1040), Interest and Ordinary Dividends, is the form that lists the interest and dividend income behind the totals on your 1040. Part I lists your taxable interest, Part II lists your ordinary dividends, and Part III asks about foreign accounts and trusts. Your net interest carries to Form 1040, line 2b, and your ordinary dividends to line 3b. You file it when either type of income tops $1,500, or when certain other situations apply.

You file Schedule B if your taxable interest is over $1,500, or your ordinary dividends are over $1,500, tested separately for each. You also file it in several other situations, even at small amounts: if you had a foreign financial account or dealings with a foreign trust, if you received seller-financed mortgage interest, if you have nominee interest or accrued bond interest, or if you're excluding savings-bond interest used for education. If none of that applies and you're under the thresholds, you skip the schedule.

Separate. The $1,500 test is applied to each category on its own, not to the two added together. So $1,600 of interest triggers Schedule B even with zero dividends, while $900 of interest plus $900 of dividends, $1,800 combined, does not. When one category crosses $1,500, you list all of that category's payers on the schedule, not only the ones above the limit. The other category still gets reported on your 1040 either way.

Your net taxable interest from Schedule B, line 4, carries to Form 1040, line 2b. Your total ordinary dividends from line 6 carry to Form 1040, line 3b. Two related figures skip Schedule B entirely: tax-exempt interest goes on Form 1040, line 2a, and qualified dividends go on line 3a. So Schedule B feeds the taxable-interest and ordinary-dividend lines, while the tax-exempt and qualified figures land directly on the 1040.

Ordinary dividends are the full amount of dividends you were paid, reported in box 1a of your 1099-DIV, and they're taxed at your regular income tax rate. Qualified dividends, in box 1b, are a subset of those that meet holding-period and other rules, and they're taxed at the lower long-term capital-gains rates of 0, 15, or 20 percent. Only ordinary dividends go on Schedule B. Qualified dividends go directly to Form 1040, line 3a, so you don't double-count them.

No. Tax-exempt interest, like most interest from municipal bonds, doesn't belong on Schedule B at all. You report it directly on Form 1040, line 2a, which is an informational line, because the interest isn't taxed on your federal return. Schedule B is only for taxable interest. Listing tax-exempt interest as taxable interest on the schedule would overstate your income, so keep the two apart and put the municipal interest straight on line 2a.

Part III asks whether you had a financial interest in, or signature or other authority over, a financial account located outside the United States, such as a foreign bank or brokerage account. It applies no matter how little interest or dividends you had, so even a filer with no reportable income can be required to complete it. A second question asks whether you're required to file the FBAR, and another asks about distributions from or dealings with a foreign trust.

No, they're different. The FBAR is the Report of Foreign Bank and Financial Accounts, filed on FinCEN Form 114, and you generally have to file it if your foreign accounts together topped $10,000 at any point during the year. Schedule B only asks whether you're required to file the FBAR; it doesn't file it for you. The FBAR is submitted electronically through FinCEN's BSA E-Filing System, is due April 15 with an automatic extension to October 15, and is not attached to your tax return.

Nominee interest is interest that was reported to you, on a 1099-INT with your name and Social Security number, but that actually belongs to someone else, often because an account is in your name for another person. You still list the full amount on Schedule B, then enter a subtotal, subtract the nominee portion with a line labeled nominee distribution, and report only your share. You also generally issue a 1099-INT to the true owner so the income is reported to the right person.

Usually not, as long as none of the special situations apply. If your taxable interest and your ordinary dividends are each $1,500 or less, and you have no foreign account, foreign trust, seller-financed mortgage interest, nominee interest, or excludable bond interest, you report the totals directly on Form 1040, lines 2b and 3b, without attaching Schedule B. The income is still fully taxable; the threshold only decides whether you have to file the supporting schedule.

Understating your interest or dividend income can trigger an accuracy-related penalty, generally 20 percent of the underpayment, plus interest, on top of the tax owed. The foreign-reporting side is more serious: failing to file a required FBAR carries steep civil penalties, higher still if the failure is willful, and Form 8938 and foreign-trust forms have their own penalties. Because the IRS gets copies of your 1099s, mismatched income figures are among the easiest errors for it to flag.

No. The generator helps you fill out and produce a completed Schedule B that you can review, attach to your Form 1040, and file, or use to check whether the schedule is required before you enter the totals elsewhere. It doesn't transmit anything to the IRS, it doesn't file the FBAR or any foreign report for you, and it isn't tax advice. You're responsible for the accuracy of your figures and for keeping the 1099-INT and 1099-DIV forms behind them.