2023 Instructions for Schedule B - Interest and Ordinary Dividends

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Department of the Treasury

Internal Revenue Service

2023 Instructions for Schedule B

Interest and

Ordinary

Dividends

Use Schedule B (Form 1040) if any of the following applies.

•

You had over $1,500 of taxable interest or ordinary dividends.

•

You received interest from a seller-financed mortgage and the buyer used the

property as a personal residence.

•

You have accrued interest from a bond.

•

You are reporting original issue discount (OID) of less than the amount shown on

Form 1099-OID.

•

You are reporting interest income of less than the amount shown on a Form 1099

due to amortizable bond premium.

•

You are claiming the exclusion of interest from series EE or I U.S. savings bonds

issued after 1989.

•

You received interest or ordinary dividends as a nominee.

•

You had a financial interest in, or signature authority over, a financial account in

a foreign country or you received a distribution from, or were a grantor of, or transfer-

or to, a foreign trust.

Section references are to the Internal

Revenue Code unless otherwise noted.

Future Developments

For the latest information about devel-

opments related to Schedule B (Form

1040) and its instructions, such as legis-

lation enacted after they were published,

go to

IRS.gov/ScheduleB.

Specific

Instructions

You can list more than one pay-

er on each entry space for lines

1 and 5, but be sure to clearly

show the amount paid next to each pay-

er’s name. Add the separate amounts

paid by the payers listed on an entry

space and enter the total in the

“Amount” column. If you still need more

space, attach separate statements using

the same format as lines 1 and 5, but

show your totals on Schedule B. Put

your name and social security number

(SSN) on the statements and attach them

at the end of your return.

Part I. Interest

Line 1. Report on line 1 all of your tax-

able interest. Taxable interest generally

should be shown on your Forms

1099-INT, Forms 1099-OID, or substi-

tute statements. Include interest from

series EE, H, HH, and I U.S. savings

TIP

bonds. Also include any accrued market

discount that is includible in income and

any gain on a contingent payment debt

instrument that is includible in income

as interest income. List each payer’s

name and the amount. Don't report on

line 1 any tax-exempt interest. See

Tax-exempt interest, later, for more in-

formation.

For more information on stated inter-

est, original issue discount (OID), mar-

ket discount, contingent payment debt

instruments, and premium, see Pub. 550

and Pub. 1212.

Seller-financed mortgages. If you

sold your home or other property and

the buyer used the property as a personal

residence, list first any interest the buyer

paid you on a mortgage or other form of

seller financing. Be sure to show the

buyer’s name, address, and SSN. You

must also let the buyer know your SSN.

If you don't show the buyer’s name, ad-

dress, and SSN, or let the buyer know

your SSN, you may have to pay a $50

penalty. If you or the buyer do not have

an SSN, use the appropriate TIN for the

filer or recipient of Form 1098. For

more information, see General

Instructions for Certain Information

Returns (2023).

Nominees. If you received a Form

1099-INT that includes interest you re-

ceived as a nominee (that is, in your

name, but the interest actually belongs

to someone else), report the total on

line 1. Do this even if you later distrib-

uted some or all of this income to others.

Under your last entry on line 1, put a

subtotal of all interest listed on line 1.

Below this subtotal, enter “Nominee

Distribution” and show the total interest

you received as a nominee. Subtract this

amount from the subtotal and enter the

result on line 2.

If you received interest as a

nominee, you must give the ac-

tual owner a Form 1099-INT

(unless the owner is your spouse) and

file Forms 1096 and 1099-INT with the

IRS. For more details, see the General

Instructions for Certain Information Re-

turns and the Instructions for Forms

1099-INT and 1099-OID.

Accrued interest. When you buy

bonds between interest payment dates

and pay accrued interest to the seller,

this interest is taxable to the seller. If

you received a Form 1099 for interest as

a purchaser of a bond with accrued inter-

est, follow the rules earlier under Nomi-

nees to see how to report the accrued in-

terest. But identify the amount to be sub-

tracted as “Accrued Interest.”

Original issue discount (OID). If

you are reporting OID in an amount less

than the amount shown in box 1 or

box 8 of Form 1099-OID, follow the

rules earlier under Nominees to see how

to report the OID. But identify the

amount to be subtracted as “OID Adjust-

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ment.” However, if the payer reported to

you a net amount of OID on the bond re-

flecting the offset of the gross amount of

OID by any acquisition premium, no re-

duction of the amount of OID income

reported to you by the payer may be

needed on Schedule B for the bond.

Amortizable bond premium. If you

elect to reduce your interest income on a

taxable bond by the amount of taxable

amortizable bond premium, follow the

rules earlier under Nominees to see how

to report the interest. But identify the

amount to be subtracted as “ABP Ad-

justment.” However, if the payer repor-

ted to you a net amount of interest in-

come on the bond reflecting the offset of

the gross amount of interest income by

the amortizable bond premium, no re-

duction of the amount of interest income

reported to you by the payer is needed

on Schedule B for the bond.

Tax-exempt interest. If you received

any tax-exempt interest (including any

tax-exempt OID), such as from munici-

pal bonds, each payer should send you a

Form 1099-INT or a Form 1099-OID. In

general, your tax-exempt stated interest

should be shown in box 8 of Form

1099-INT or, for a tax-exempt OID

bond, in box 2 of Form 1099-OID, and

your tax-exempt OID should be shown

in box 11 of Form 1099-OID. Enter the

total on line 2a of your Form 1040 or

1040-SR. However, if you acquired a

tax-exempt bond at a premium, only re-

port the net amount of tax-exempt inter-

est on line 2a of your Form 1040 or

1040-SR (that is, the excess of the

tax-exempt interest received during the

year over the amortized bond premium

for the year). Also, if you acquired a

tax-exempt OID bond at an acquisition

premium, only report the net amount of

tax-exempt OID on line 2a of your Form

1040 or 1040-SR (that is, the excess of

the tax-exempt OID for the year over the

amortized acquisition premium for the

year). See Pub. 550 for more informa-

tion about OID, bond premium, and ac-

quisition premium.

Also include on line 2a of your Form

1040 or 1040-SR any exempt-interest

dividends from a mutual fund or other

regulated investment company. This

amount should be shown in box 12 of

Form 1099-DIV.

If an amount is shown in box 9 of

Form 1099-INT, you must generally re-

port it on line 2g of Form 6251. See the

Instructions for Form 6251 at IRS.gov/

Form6251 for details.

Line 3. If, during 2023, you cashed ser-

ies EE or I U.S. savings bonds issued af-

ter 1989 and you paid qualified higher

education expenses for yourself, your

spouse, or your dependents, you may be

able to exclude part or all of the interest

on those bonds. See Form 8815 at

IRS.gov/Form8815 for details.

Part II. Ordinary Dividends

You may have to file Form 5471

if, in 2023, you were an officer

or director of a foreign corpo-

ration. You may also have to file Form

5471 if, in 2023, you owned 10% or

more of the total (a) value of a foreign

corporation’s stock, or (b) combined

voting power of all classes of a foreign

corporation’s stock with voting rights.

For details, see Form 5471 and its in-

structions at IRS.gov/Form5471.

Line 5. Report on line 5 all of your or-

dinary dividends. This amount should be

shown in box 1a of your Forms

1099-DIV or substitute statements.

Nominees. If you received a Form

1099-DIV that includes ordinary divi-

dends you received as a nominee (that

is, in your name, but the ordinary divi-

dends actually belong to someone else),

report the total on line 5. Do this even if

you later distributed some or all of this

income to others. Under your last entry

on line 5, put a subtotal of all ordinary

dividends listed on line 5. Below this

subtotal, enter “Nominee Distribution”

and show the total ordinary dividends

you received as a nominee. Subtract this

amount from the subtotal and enter the

result on line 6.

If you received dividends as a

nominee, you must give the ac-

tual owner a Form 1099-DIV

(unless the owner is your spouse) and

file Forms 1096 and 1099-DIV with the

IRS. For more details, see the General

Instructions for Certain Information Re-

turns and the Instructions for Form

1099-DIV.

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Part III. Foreign Accounts

and Trusts

Regardless of whether you are

required to file FinCEN Form

114 (FBAR), you may be re-

quired to file Form 8938, Statement of

Specified Foreign Financial Assets, with

your income tax return. Failure to file

Form 8938 may result in penalties and

extension of the statute of limitations.

See IRS.gov/Form8938 for more infor-

mation.

Line 7a—Question 1. Check the “Yes”

box if at any time during 2023 you had a

financial interest in or signature authori-

ty over a financial account located in a

foreign country. See the definitions that

follow. Check the “Yes” box even if you

aren't required to file FinCEN Form 114.

Financial account. A financial ac-

count includes, but isn't limited to, a se-

curities, brokerage, savings, demand,

checking, deposit, time deposit, or other

account maintained with a financial in-

stitution (or other person performing the

services of a financial institution). A fi-

nancial account also includes a com-

modity futures or options account, an in-

surance policy with a cash value (such

as a whole life insurance policy), an an-

nuity policy with a cash value, and

shares in a mutual fund or similar

pooled fund (that is, a fund that is avail-

able to the general public with a regular

net asset value determination and regu-

lar redemptions).

Financial account located in a for-

eign country. A financial account is lo-

cated in a foreign country if the account

is physically located outside of the Uni-

ted States. For example, an account

maintained with a branch of a U.S. bank

that is physically located outside of the

United States is a foreign financial ac-

count. An account maintained with a

branch of a foreign bank that is physi-

cally located in the United States isn't a

foreign financial account.

Signature authority. “Signature au-

thority” is the authority of an individual

(alone or in conjunction with another in-

dividual) to control the disposition of as-

sets held in a foreign financial account

by direct communication (whether in

writing or otherwise) to the bank or oth-

er financial institution that maintains the

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financial account. See the FinCEN Form

114 instructions for exceptions. Don't

consider the exceptions relating to sig-

nature authority in answering Question 1

on line 7a.

Other definitions. For definitions of

“financial interest,” “United States,” and

other relevant terms, see the instructions

for FinCEN Form 114.

Line 7a—Question 2. See FinCEN

Form 114 and its instructions at

FINCEN.gov to determine whether you

must file the form. Check the “Yes” box

if you are required to file the form.

Check the “No” box if you aren't re-

quired to file the form.

If you checked the “Yes” box to

Question 2 on line 7a, you must elec-

tronically file FinCEN Form 114 with

Treasury's Financial Crimes Enforce-

ment Network. A U.S. person that has a

financial interest in or signature authori-

ty over foreign financial accounts must

file the form if the aggregate value of

foreign financial accounts exceeds

$10,000 at any time during 2023. Do

not attach FinCEN Form 114 to your tax

return.

For the due date and more informa-

tion about FinCEN Form 114, see

FINCEN.gov.

If you are required to file Fin-

CEN Form 114 but don't prop-

erly do so, you may have to pay

a civil penalty up to $10,000. A person

who willfully fails to report an account

or provide account identifying informa-

tion may be subject to a civil penalty

equal to the greater of $100,000 or 50%

of the balance in the account at the time

of the violation. Willful violations may

also be subject to criminal penalties.

Line 7b. If you are required to file Fin-

CEN Form 114, list the name(s) of the

foreign country or countries in the space

CAUTION

provided on line 7b. Attach a separate

statement if you need more space.

Line 8. If you received a distribution

from a foreign trust, you must provide

additional information. For this purpose,

a loan of cash or marketable securities is

generally considered to be a distribution.

See the Instructions for Form 3520 at

IRS.gov/Form3520 for details.

If you were the grantor of, or trans-

feror to, a foreign trust that existed dur-

ing 2023, you may have to file Form

3520.

Don't attach Form 3520 to Form 1040

or Form 1040-SR. Instead, file it at the

address shown in its instructions.

If you were treated as the owner of a

foreign trust under the grantor trust

rules, you are also responsible for ensur-

ing that the foreign trust files Form

3520-A. Form 3520-A is due on March

15, 2024, for a calendar year trust. See

the Instructions for Form 3520-A at

IRS.gov/Form3520A for details.

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