What Schedule B Is For

Schedule B (Form 1040A or 1040) is an IRS tax form used to report interest income and ordinary dividend income you received during the 2014 tax year. Think of it as a detailed itemization worksheet that breaks down exactly where your investment income came from—whether that's interest from your savings account, dividends from stocks, or income from bonds.

The form consists of three main parts: Part I lists all your interest income sources, Part II details your ordinary dividend income, and Part III addresses whether you had any foreign financial accounts or trusts. Schedule B attaches to your main Form 1040 or 1040A and helps the IRS verify that you've properly reported all your investment income.

Not everyone needs to file Schedule B. If your total interest and dividends were modest—$1,500 or less—you can simply report the totals directly on lines 8a and 9a of your Form 1040 without completing Schedule B. However, certain situations require Schedule B regardless of the amount, such as when you received interest from a seller-financed mortgage where the buyer used the property as a personal residence, or when you're dealing with special situations like bond premium amortization or original issue discount adjustments. IRS

When You’d Use Schedule B (Filing Late or Amended Returns)

Original Deadlines and Amending

For the 2014 tax year, the original filing deadline was April 15, 2015. If you filed your 2014 return on time but later realized you made an error on Schedule B—perhaps you forgot to report interest income from a savings account or miscalculated your dividends—you would need to file an amended return using Form 1040X.

The good news is that certain mistakes don't require an amended return. If you simply made a math error or forgot to attach Schedule B but reported the correct totals on your Form 1040, the IRS will typically catch and correct simple math mistakes automatically. However, if you underreported income, overstated deductions, or failed to report foreign accounts, you should file an amended return. IRS

Time Limits and How to Amend

For 2014 tax returns, you generally had until April 15, 2018 (three years from the original deadline) to file an amended return if you were claiming a refund. If you discovered that you owed additional tax, you should have filed the amended return as soon as possible to minimize interest and potential penalties. According to IRS guidance, Form 1040X for 2014 would have needed to be filed by mail—electronic filing of amended returns wasn't available for that tax year—and you would attach a corrected Schedule B showing the accurate information. IRS

Key Rules or Details for 2014

The $1,500 Threshold

The fundamental threshold for Schedule B in 2014 was $1,500. If your combined taxable interest and ordinary dividends exceeded this amount, you were required to file Schedule B and list each payer separately. This rule applied whether you filed Form 1040 or Form 1040A.

Special Situations That Require Schedule B (Regardless of Amount)

• Seller-financed mortgages: If you sold property and the buyer paid you interest on a mortgage, you had to list this first on Schedule B and include the buyer's name, address, and Social Security number.
• Accrued bond interest: When purchasing bonds between interest payment dates, special reporting was required.
• Original Issue Discount (OID): If you reported OID in a different amount than what appeared on Form 1099-OID, Schedule B was mandatory.
• Bond premium amortization: Reducing your interest income by amortizable bond premium required Schedule B.
• Nominee income: If you received interest or dividends in your name that actually belonged to someone else, you needed to report this on Schedule B.
• Education savings bond exclusion: If you cashed Series EE or I U.S. savings bonds issued after 1989 for qualified higher education expenses, you used Schedule B along with Form 8815.

Foreign Accounts and Trusts (Part III)

For foreign accounts, 2014 had strict reporting requirements. Part III of Schedule B asked whether you had financial interest in or signature authority over foreign accounts at any time during the year. If the aggregate value of all your foreign accounts exceeded $10,000 at any point in 2014, you were required to file FinCEN Form 114 (FBAR) separately by June 30, 2015. This was filed electronically through the Financial Crimes Enforcement Network's BSA E-Filing System, not with your tax return. IRS

Step-by-Step (High Level)

Part I – Interest Income

Begin by gathering all your Forms 1099-INT and 1099-OID from banks, credit unions, brokerage firms, and other payers. On line 1, list each payer's name on the left side and the corresponding interest amount on the right. If you received interest from a seller-financed mortgage, list this first with the buyer's Social Security number and address. If you received interest through a brokerage firm, you can list the brokerage name once and show the total interest from that firm. Add up all interest amounts and enter the total on line 2. If you're excluding interest from education savings bonds, enter that amount on line 3 and subtract it from line 2. The result goes on line 4 and transfers to Form 1040, line 8a.

Part II – Ordinary Dividends

Collect all your Forms 1099-DIV from investment companies, mutual funds, and corporations that paid you dividends. On line 5, list each payer's name and the ordinary dividend amount from box 1a of each Form 1099-DIV. Like with interest, if you received dividends through a brokerage, you can consolidate under the brokerage name. Total all dividend amounts and enter the sum on line 6, which transfers to Form 1040, line 9a.

Part III – Foreign Accounts and Trusts

This section requires careful attention. Question 7a asks whether you had financial interest in or signature authority over foreign accounts during 2014. If yes, question 7b asks whether you're required to file the FBAR (FinCEN Form 114). Review the threshold ($10,000 aggregate maximum balance) and answer honestly. If required to file, list the foreign country or countries on line 7b. Question 8 asks whether you received distributions from or were a grantor/transferor to a foreign trust, which might require Form 3520. IRS

Common Mistakes and How to Avoid Them

Forgetting to list all payers

One of the most frequent errors is consolidating interest or dividends without listing individual payers. Even if you have twenty different sources of interest totaling $1,600, you must list each payer separately on Schedule B. Keep all your Forms 1099 organized and cross-reference them with your Schedule B entries.

Missing the $1,500 threshold

Some taxpayers with interest just over $1,500 report only the total on Form 1040 without filing Schedule B. This triggers IRS notices requesting the missing schedule. When in doubt, file Schedule B—there's no penalty for filing it when you have exactly $1,500 or slightly less.

Incorrectly reporting nominee income

If you received interest or dividends in your name but the income actually belongs to another person (such as a joint account where you're not the beneficial owner), you need to report the full amount, then subtract the nominee portion with proper labeling. Many taxpayers simply omit these amounts, which causes discrepancies with Forms 1099 that the IRS receives. According to the Schedule B instructions, you must give the actual owner a Form 1099-INT or 1099-DIV (unless the owner is your spouse) and file these forms with the IRS along with Form 1096. IRS

Foreign account reporting errors

The most serious mistakes involve Part III. Some taxpayers check "No" on foreign account questions out of confusion or fear, even when they had qualifying accounts. Others fail to file the separate FBAR by the June 30 deadline. Remember that Schedule B questions and FBAR filing are separate requirements—you answer the Schedule B questions regardless of whether you file an FBAR. According to IRS guidance, civil penalties for failing to file FBAR can reach $10,000 for non-willful violations and up to $100,000 or 50% of the account balance for willful violations. IRS

Missing seller-financed mortgage details

When you've financed a property sale and the buyer made interest payments to you, you must list this interest first and include the buyer's identifying information. Omitting the buyer's Social Security number can result in a $50 penalty.

Not attaching required forms

Schedule B references other forms like Form 8815 (for education savings bond exclusion) or Form 3520 (for foreign trusts). Forgetting to attach these supporting forms delays processing and may trigger IRS inquiries.

What Happens After You File

IRS Matching and Normal Processing

Once you mail your 2014 Form 1040 with Schedule B attached, the IRS processes your return through their computer systems. The IRS receives copies of all Forms 1099-INT and 1099-DIV that were issued to you, and their systems automatically match these against what you reported on Schedule B. This matching process typically occurs within several months after filing.

If everything matches correctly, your return processes normally. You'll receive your refund (if applicable) or your tax account will show a zero balance or payment received. The IRS typically issues most refunds within 21 days for electronically filed returns, though paper returns like those requiring Schedule B amendments can take 6-8 weeks.

CP2000 Notices for Discrepancies

If the IRS finds discrepancies—such as unreported interest or dividends—you'll receive a CP2000 notice, usually 12-18 months after filing. This "Underreporter Inquiry" explains the discrepancy and proposes additional tax, interest, and sometimes penalties. You have the right to respond, provide documentation, or agree with the proposed changes.

Foreign Account Follow-Ups

For foreign account reporting in Part III, the IRS scrutinizes these answers carefully. If you indicated foreign accounts but didn't file the required FBAR with FinCEN, you might receive separate inquiries. The IRS works closely with FinCEN to identify taxpayers who may not be compliant with foreign account reporting requirements. IRS

Amended Return Processing Times

If you filed an amended return with a corrected Schedule B, processing takes significantly longer. According to IRS guidance, amended returns generally take 8-12 weeks to process, though some cases may take up to 16 weeks. IRS

FAQs

Q1: I received $1,450 in interest and $100 in dividends—do I need Schedule B?

Yes. Although neither category exceeds $1,500 individually, the filing requirement applies if you had over $1,500 of taxable interest or ordinary dividends, so your $1,550 total requires Schedule B. List all payers in Parts I and II.

Q2: My 1099-INT shows $80 in box 1 and $20 in box 3—where do these go on Schedule B?

Box 1 (interest income) goes on Schedule B Part I, line 1. Box 3 (interest on U.S. Savings Bonds and Treasury obligations) also goes on line 1—it's included in your taxable interest. However, box 8 (tax-exempt interest) does not go on Schedule B at all; it's reported on Form 1040, line 8b. IRS

Q3: I had a foreign bank account with a maximum balance of $8,500 in 2014. Do I need to file FBAR?

No. The FBAR threshold is $10,000 aggregate maximum balance across all foreign accounts at any time during the year. However, you must still answer "Yes" to question 7a on Schedule B Part III (because you had a foreign account), but you'll check "No" for question 7b (not required to file FBAR). IRS

Q4: Can I file Schedule B electronically?

For original 2014 returns, yes—Schedule B could be e-filed as part of your Form 1040 through tax software or a tax professional. However, amended returns using Form 1040-X for the 2014 tax year must be filed by paper mail and cannot be e-filed. IRS

Q5: I received a 1099-DIV with $800 in box 1a (ordinary dividends) and $250 in box 1b (qualified dividends). How do I report this?

Schedule B Part II only asks for ordinary dividends, so you'd report the $800 from box 1a on line 5. The $250 qualified dividends don't appear on Schedule B at all—they're reported separately on Form 1040, line 9b, and may qualify for lower tax rates if you meet the holding period requirements. IRS

Q6: What if I forgot to report $200 of interest on my 2014 return?

It depends on when you discovered the error. If it's before April 15, 2018 (within three years of the original deadline), you can file an amended return using Form 1040-X with a corrected Schedule B. The $200 might not result in significant additional tax, but it's better to correct it proactively. According to IRS Topic 308, you should file an amended return if there's a change in your income. IRS

Q7: I received dividends as a nominee—some were mine, some belonged to my elderly parent. How do I report this correctly?

Report the full amount shown on your 1099-DIV on Schedule B line 5, then create a subtotal of all line 5 entries. Below this, write "Nominee Distribution" and enter the amount that belonged to your parent. Subtract this to get your line 6 total. According to the Schedule B instructions, you must also issue Form 1099-DIV to your parent showing their portion and file copies with the IRS along with Form 1096. IRS

This guide is based on IRS Form Schedule B (Form 1040A or 1040) for tax year 2014 and its instructions. For specific tax advice regarding your situation, consult a qualified tax professional or visit www.irs.gov/scheduleb for the most current information.