Schedule B (Form 1040A or Form 1040) — 2013 Checklist
Purpose
Schedule B is used to report taxable interest, ordinary dividends, and specific foreign financial account activity for the 2013 tax year. It is attached to Form 1040 or Form 1040A as part of a U.S. individual income tax return. The schedule is required when Interest income or Dividend income exceeds $1,500, or when specific disclosure rules apply, including foreign accounts, foreign trusts, nominee income, or seller-financed mortgage interest.
The Internal Revenue Service uses IRS Form 1040, Schedule B, to document income sources, including corporate bonds, interest from bonds, accrued interest, original issue discount, and bond premium adjustments. Part III also serves as a disclosure tool for foreign bank relationships and trust activity, helping enforce tax compliance rules tied to international reporting. Missing or incorrect entries can affect acceptance status for e-filed returns and may require correction through Form 1040-X.
Preparation Steps
1. Determine whether Schedule B is required
Schedule B must be filed for the 2013 tax year if taxable interest exceeds $1,500 or ordinary dividends exceed $1,500. It is also required regardless of income level if you received seller-financed mortgage interest from a buyer who used the property as a personal residence, claimed an exclusion for series EE or series I savings bond interest, received nominee interest or dividends, or had foreign accounts or foreign trust activity.
These conditions determine whether Schedule B must accompany Form 1040 or Form 1040A when filing your income tax return.
2. Gather supporting IRS forms and records
Collect all Forms 1099 that report Interest income or Dividend income, including Form 1099-INT, Form 1099-DIV, and Form 1099-OID. Keep other information returns, such as Form 1099-G or Form 1099-MISC, with your tax records if they relate to your broader tax situation.
When using tax software or a PDF editor, verify that all payers are included and that confidential information, such as Social Security numbers, is handled securely and protected.
3. Report interest income in Part I
List each payer of taxable interest in Part I as itemized line items. Include bank interest, interest from corporate bonds, accrued interest, and original issue discount when applicable. Enter payer names and amounts clearly so that totals are transferred correctly to the IRS 1040 or Form 1040A.
Do not include tax-exempt interest from municipal bonds on Schedule B. That amount is reported elsewhere on the tax return. If a bond premium applies, adjust the interest income accordingly in accordance with the applicable reporting rules.
4. Report seller-financed mortgage interest first
If you received interest from a seller-financed mortgage where the buyer used the property as a personal residence, list this interest first in Part I. Include the buyer’s name, address, and Social Security Number, and provide your Social Security Number to the buyer. This requirement applies even if Schedule B is otherwise filed for a reason other than this one.
5. Handle nominee interest correctly
If a Form 1099-INT reports interest that belongs to another person, report the full amount first, then identify and subtract the nominee portion to arrive at your net interest income. You are generally required to issue the appropriate Form 1099 to the actual owner and file the related transmittal. This prevents duplicate taxation and supports proper tax compliance.
6. Apply the series EE savings bond interest exclusion
If you redeemed series EE or series I savings bonds issued after 1989 and used the proceeds for qualified education expenses, you may exclude some or all of the interest. Calculate the exclusion using the applicable IRS forms and reflect the excluded amount on Schedule B so that only net taxable interest carries to your tax return.
7. Report ordinary dividends in Part II
List each payer of ordinary dividends in Part II using amounts reported on Form 1099-DIV. Ordinary dividends include many distributions that may also contain Qualified dividends, which are handled separately on the tax return for rate purposes.
If you received dividends as a nominee, follow the same process used for nominee interest: report the total, subtract the nominee amount, and ensure the actual owner gets the appropriate Form 1099.
8. Complete Part III for foreign accounts and foreign trusts
Complete Part III if net taxable interest or ordinary dividends exceed $1,500, or if you had financial interest in or signature authority over foreign accounts at any time during 2013. Part III is also required if you received distributions from Foreign trusts or were a grantor or transferor.
Foreign accounts typically refer to accounts held with a bank or other financial institution located outside of the country of residence. Answers in Part III should be consistent with other foreign asset disclosures required with your income tax return.
9. Evaluate separate foreign reporting obligations
Schedule B disclosures do not replace other reporting requirements. Depending on asset values and account balances, you may also be required to file Form 8938 with your tax return or submit FinCEN Form 114 separately through the electronic filing system. Each requirement has different thresholds and filing mechanics.
10. Assemble, review, and file
Attach Schedule B to Form 1040 or Form 1040A and review all entries for accuracy. Confirm that seller-financed mortgage details include required identification, nominee income is appropriately reduced, and foreign account questions are answered correctly.
If you file electronically, verify acceptance status through your tax software and resolve any rejection codes promptly. If documents are prepared using a PDF editor, Google Workspace tools, or a digital signature workflow supported by an eSignature API or platforms such as Lumin Sign, ensure that all signatures are legally compliant and that the final submission meets IRS requirements for e-filed returns.
Critical Reminders for 2013 Filing
Electronic foreign account reporting is separate from the tax return.
FinCEN Form 114 is not part of the IRS 1040 submission package and must be filed separately when required. Keep confirmation records that show acceptance status, and resolve rejection codes promptly if the filing system reports an error.
Foreign reporting can require multiple filings.
Schedule B, Part III, Form 8938, and FinCEN Form 114 can all be applied in the same tax year, but they have different thresholds and filing requirements. Do not assume that answering foreign account questions on Schedule B replaces any other obligation. If foreign trusts are involved, additional filings may be required outside of the income tax return.
Errors may require an amended return.
If you discover omitted taxable interest, ordinary dividends, or incorrect foreign account answers after filing, you may need to correct the return using Form 1040-X. Prompt corrections can reduce the need for follow-up notices and support ongoing tax compliance.
Keep supporting records organized.
Retain Form 1099 statements, related worksheets for original issue discount and bond premium, and documentation supporting exclusions and foreign reporting positions. Strong records help if the Internal Revenue Service questions your tax situation, and they also reduce rework if you must respond to notices or file an amended return.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
