Last Updated : January 14, 2009
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Schedule B

Interest and Ordinary Dividends for FORM 1040 Filers

Use Schedule B to report interest and dividends if any of the following applies.

  • Taxpayer had over $1500 of taxable interest or dividends.
  • Taxpayer received seller-financed mortgage interest.
  • Taxpayer received interest or dividends as a nominee.
  • Taxpayer is claiming exclusion of interest on series EE or I U.S. savings bonds issued after 1989.
  • Taxpayer is reporting adjustments for Original Issue Discount, Amortizable Bond Premium, or Accrued Interest.
  • Taxpayer had a foreign account or received a distribution from, or was a grantor of, or transferor to, a foreign trust.

Part I - Interest

 Line 1:

  • Interest income from seller- Financed Mortgages :

If the taxpayer has received interest from a seller financed mortgage where the buyer used the property as a personal residence, type the name, address and SSN of the person who paid the interest and the amount paid.

  •  Other Interest :

(1)Report on this line other taxable interest.
(2)If the taxpayer received a Form 1099-INT or Form 1099-OID from a brokerage
     firm, list the Brokerage firm as the payer.
(3)If you want to bifurcate NAEOB then select from the combo box the abbreviations
    And type in the amount of that related distribution.
    Here N = Nominee Distribution Amount
           A = Accrued Interest Amount
           E = Exempt Interest Amount
           O = OID Adjustment (OID stands for Original Issue Discount)
           B = ABP Adjustment (ABP stands for Amortized Bond Premium)
(4)If you want to bifurcate the amount of Penalties or Federal Withholding on the respective interest received type in the amount in the space provided for the same.

  • Interest From K-1’s :

If any of the K-1’s worksheets are added i.e. (schedule K-1P/S OR schedule K-1ET) and Interest received is entered on these wkts then the package transfers the amount from the wkts on this line.

  • Interest Subtotal:

On this line total of all amounts of seller financed mortgage, other interest, interest from K-1’s is done by the package.

  • Nominee Distributions Amount:

On this line from the details entered in other interest part the package transfers the total of the amounts from NAEOB amount column of only those entered with abbreviations ‘N’.

  • Accrued Interest Amount:

On this line from the details entered in other interest part the package transfers the total of the amounts from NAEOB amount column of only those entered with abbreviations ‘A’.

  • Exempt Interest Amount:

On this line from the details entered in other interest part the package transfers the total of the amounts from NAEOB amount column of only those entered with abbreviations ‘E’.

  • OID Adjustment Amount:

On this line from the details entered in Other interest part the package transfers the total of the amounts from NAEOB amount column of only those entered with abbreviations ‘O’.

  • ABP Adjustment Amount:

On this line from the details entered in Other interest part the package transfers the total of the amounts from NAEOB amount column of only those entered with abbreviations ‘B’.

Line 3: FORM 8815, US Bond Exclusion
You should complete Form 8815, if during the year the taxpayer cashed series EE or I U.S. savings bond issued after 1989 and paid Qualified higher Education Expenses for himself, or herself, his or her spouse, or Dependents. The taxpayer may be able to exclude part or all of the interest on those bonds. See form 8815 and its IRS instructions for Details.

Part II – Ordinary Dividends

Line 5:
(1)Report on line 5 all of your ordinary dividends. This amount should be shown in box 1a of Forms 1099-DIV or substitute statements. List each Payer’s name and show the amount.
(2)If you want to bifurcate Dividend Income as Ordinary, Capital Gain, 1250 gain, Federal Withholding, Exempt Interest dividend, Qualified Dividend, 28% Gain enter on the Space provided the amount of such dividend.
(3)If the taxpayer received a FORM 1099-DIV from a Brokerage Firm, list the brokerage firm as the Payer.
(4) If you received a Form 1099-DIV that includes ordinary Dividends you received as a Nominee, be sure to enter ‘N’ from the combo box in column Nominee.

  • Dividends from K-1’s:

          If any of the K-1’s worksheets are added i.e. (schedule K-1P/S OR schedule K-1ET)
          and dividend received is entered on these wkts then the package transfers
          the amount from the wkts on this line.

  • Ordinary Dividend Subtotal:

On this line total of all amounts of amount column,  Dividend from K-1’s is done
by the package.

  • Nominee Distribution Amount:

On this line from the details entered in Dividend part the package transfers the total of the amounts from amount column of only those entered with abbreviations ‘N’ in Nominee Distribution column.

 

Part III – Foreign Accounts and Trusts

Line 7a:
Check the YES checkbox on line 7a if either of (1) or (2) below applies:
 

  • The client owns more than 50% of the stock in any corporation that owns one or more

Foreign bank accounts.

  • At any time during 2006 the client had an interest in or signature or other authority

Over a financial account in a foreign country (such as a bank account, securities account, or other financial account)

 

            NOTE: For line 7a, condition (2) does not apply to foreign securities held in a U.S.
            Securities account.

Exceptions:
Check the NO checkbox if any of the following applies to the client.

  • The combined value of the accounts was $10000 or less during the whole year.
  • The accounts were with a U.S military banking facility operated by a U.S financial institution.

 

  • The client was an officer or employee of a commercial bank that is supervised by the Comptroller of the Currency, the Board of Governor’s of the Federal Reserve System, or the Federal Deposit Insurance Corporation; the account was in the client’s employer’s name; and the client did not have a personal financial interest in the account.
  • The client was an officer or employee of a domestic corporation with securities listed on NSE or with assets of more than $1 million and 500 or more shareholders of record; the account was in the client’s employer’s name; the client did not have a personal financial interest in the account; and the corporation’s chief financial officer has given the client written notice that the corporation has filed a current report that includes the account.

 

If you checked the YES checkbox on line 7a, file FORM TD F 90-22.1 by the department of treasury at the address shown on that form. Do not attach it to FORM 1040.

Line 7b:
IF you checked the YES checkbox on line 7a, enter the name of the foreign country or countries in the space provided on line 7b.

Line 8: Foreign Trusts

  • If the client received a distribution from a foreign Trust, He or She must provide additional information. For this purpose, a loan of cash or marketable securities generally is considered to be a distribution. Refer form 3520 for details.
  • If the client was the Guarantor of , or the transferor to, a foreign trust that existed during 2006, the client may have to file Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts.

 

FORM 8814 checkbox:
If filing Form 8814 for a child who has a foreign account, or received a distribution from, or was the guarantor of , or transferor  to, a foreign trust , you must complete PART 3 of schedule B for the child.

Check this box manually if you are filing form 8814 along with schedule B.

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