Form 1040 Schedule B: Interest and ordinary dividends guide
For tax year 2025, Schedule B reports taxable interest, ordinary dividends, and foreign-account or trust disclosures. Most filers need it when taxable interest or ordinary dividends exceed $1,500, but several other triggers apply.
This update is verified for 2025 returns filed in 2026 and reflects IRS and FinCEN guidance available as of August 2026. The IRS Schedule B page lists no recent developments at this time.
IRS Schedule B (Form 1040): Interest and ordinary dividends explained (2026)
For 2025, the Schedule B Form 1040 overview sets the main income trigger at more than $1,500 of taxable interest or ordinary dividends. The 3-part schedule also covers payer details, foreign-account questions, and specified foreign-trust disclosures when any filing trigger applies.
See our Form 1040 guide for how Schedule B fits into the main individual return.
The following 4 points give the 2025 rules at a glance:
- More than $1,500 of taxable interest or ordinary dividends may require Schedule B.
- Part I lists taxable interest; Part II lists ordinary dividends.
- Part III asks about foreign financial accounts and certain foreign trusts.
- Qualified dividends remain inside ordinary dividends and are also shown on Form 1040 line 3a.
Interest and dividends are unearned income. Our earned versus unearned income guide explains the distinction.
What exactly is Schedule B (Form 1040)?
Schedule B is a 3-part attachment to Form 1040. It lists taxable interest in Part I, ordinary dividends in Part II, and foreign-account or foreign-trust disclosures in Part III. It supports Form 1040 and does not replace FBAR or Form 8938.
It is the IRS schedule used to show payer-level interest and dividend details and answer foreign-account and trust questions for the 2025 return.
The Schedule B tax form can be required even when interest and dividends are below $1,500. A foreign financial account or certain foreign-trust activity can trigger Part III without a minimum account balance.
The Schedule B 1040 attachment supports the individual return; it does not replace separate foreign-account reports.
Schedule B supports Form 1040; it does not replace FBAR or Form 8938.
The $1,500 threshold is only 1 filing trigger – foreign accounts and other special situations can require Schedule B at lower income levels.
| What Schedule B is | What it reports | What it does not replace | Who commonly needs it |
|---|---|---|---|
| A Form 1040 attachment | Taxable interest, ordinary dividends, Part III disclosures | FBAR or Form 8938 | Filers over $1,500 or with another Schedule B trigger |
If foreign assets are involved, compare FBAR and Form 8938 before filing.
When do you have to file Schedule B?
For tax year 2025, file Schedule B if at least 1 IRS trigger applies. The best-known trigger is more than $1,500 of taxable interest or ordinary dividends, but seller-financed mortgage interest, nominee income, foreign accounts, foreign trusts, and specified bond adjustments can also require it.
The following 8 yes-or-no checks cover the IRS filing triggers for 2025:
- Did taxable interest exceed $1,500?
- Did ordinary dividends exceed $1,500?
- Did you receive seller-financed mortgage interest where the buyer used the property as a personal residence?
- Do you have accrued bond interest to report?
- Are you reporting OID below the amount shown on Form 1099-OID or interest reduced for amortizable bond premium?
- Are you claiming the Series EE or I savings-bond education interest exclusion?
- Did you receive interest or ordinary dividends as a nominee?
- Did you have a foreign account or specified foreign-trust activity?
A “yes” to any item can mean Schedule B is required. If your broader filing obligation is unclear, see our guide on whether you need to file a US tax return.
Types of income that go on Schedule B (Form 1040)
Schedule B separates 2 income categories: taxable interest in Part I and ordinary dividends in Part II. Payer-level amounts are listed first, then totals move to Form 1040 line 2b for taxable interest and line 3b for ordinary dividends on the 2025 return.
The key rule is that qualified dividends stay inside the ordinary-dividend total; they are not added a second time.
| Item | Schedule B treatment | Where else it appears |
|---|---|---|
| Taxable interest | Part I | Form 1040 line 2b |
| Ordinary dividends, including the qualified portion | Part II | Form 1040 line 3b |
| Qualified-dividend portion | Included in Part II total | Form 1040 line 3a |
| Tax-exempt interest | Not on Part I | Form 1040 line 2a |
| Capital gain distributions | Not ordinary dividends | Schedule D or Form 1040 line 7a, as applicable |
Foreign dividends still enter the US return even without a US information form. See our foreign-dividend tax guide for foreign payer and credit issues.
Taxable interest income: More than just savings accounts
Taxable interest for 2025 can include bank interest, CDs, corporate bonds, Treasury obligations, taxable savings-bond interest, OID, and other debt income. If total taxable interest is over $1,500, Part I lists each payer and carries the final amount to Form 1040 line 2b.
The following 4 common sources can belong in Part I:
- Bank savings, checking, and money market account interest.
- Certificates of deposit and corporate bond interest.
- Treasury note, bill, and bond interest.
- Taxable U.S. savings-bond interest and reportable OID.
Your Form 1099-INT is a key source document, but foreign banks may not issue one.
Taxable interest belongs in Part I; federally tax-exempt interest is reported elsewhere.
| Taxable on Schedule B | Not taxable on Schedule B |
|---|---|
| Bank and CD interest | Tax-exempt municipal bond interest |
| Corporate and Treasury interest | Excluded Series EE or I bond interest claimed on Form 8815 |
| Taxable U.S. savings-bond interest | Exempt-interest dividends reported on Form 1040 line 2a |
If interest is held inside an Australian retirement arrangement, separate account rules may apply. Our Australian superannuation tax guide covers that issue.
The $1,500 threshold does not make the first $1,500 tax-free. It determines when Schedule B is required; taxable interest still belongs on Form 1040 even below that amount.
Taxable ordinary dividends: Beyond stock payments
Part II reports ordinary dividends for 2025, usually from Form 1099-DIV box 1a. Box 1a includes the qualified-dividend portion, so qualified dividends remain in the Schedule B total when required and are also reported separately on Form 1040 line 3a.
The following 3 common sources can produce ordinary dividends:
- Corporate stock and mutual funds.
- Real estate investment trusts.
- Money market funds that pay dividends rather than bank interest.
See our Form 1099-DIV guide for box-by-box reporting.
Qualified dividends are included in Schedule B’s ordinary-dividend total and also shown separately on line 3a.
| Reported on Schedule B | Reported elsewhere or treated differently |
|---|---|
| Form 1099-DIV box 1a ordinary dividends | Box 1b qualified portion is also shown on Form 1040 line 3a |
| Ordinary dividends from foreign payers | Capital gain distributions generally use Schedule D or Form 1040 line 7a |
| Nominee ordinary dividends, with adjustment | Exempt-interest dividends go to Form 1040 line 2a |
Based on our client scenario at TFX: box 1a is $2,400 and box 1b is $1,700. Schedule B uses $2,400, Form 1040 line 3b uses $2,400, and line 3a separately shows $1,700. The $1,700 is not added again.
Additional reporting scenarios
Schedule B can be required in 2025 even when both interest and ordinary dividends are $1,500 or less. IRS instructions also cover nominee income, seller-financed mortgage interest, bond adjustments, the savings-bond education exclusion, foreign accounts, and specified foreign-trust activity as well.
The following 6 exceptions are worth checking before you decide Schedule B is unnecessary:
- Nominee interest or dividends: report the payer amount, then show the nominee adjustment.
- Seller-financed mortgage interest: identify the buyer when the property is the buyer’s personal residence.
- Accrued bond interest: use the Schedule B adjustment method in the instructions.
- OID or bond-premium adjustments: reconcile the amount reported to you with the taxable amount.
- Savings-bond education exclusion: use Form 8815 for qualifying Series EE or I bond interest.
- Foreign account or trust activity: complete Part III when its questions apply.
If any of these 6 items apply, use this 3-step check:
- Identify the payer, account, bond, mortgage, or trust that created the trigger.
- Match the item to Part I, Part II, or Part III before entering totals.
- Keep the statement or supporting record with your 2025 tax files.
Year-end records help reconcile these items. Review our year-end financial checklist for expats before gathering statements.
If a required schedule was missed, the result depends on the omitted income or disclosure.
See what happens when an expat tax return is not filed correctly.
Foreign accounts and trusts: a closer look
Schedule B Part III applies to foreign-account and trust disclosures for 2025, even when a foreign account earned $0. Line 7 asks about a financial interest or signature authority over a foreign financial account, while line 8 asks about specified foreign-trust activity.
The following 3 Part III issues deserve separate checks:
- Foreign bank or brokerage accounts: answer line 7a question 1 based on financial interest or signature authority.
- Signature authority: an account can count even when you do not own the funds.
- Foreign trusts: line 8 can lead to separate Form 3520 responsibilities.
Our foreign asset disclosure guide covers related information returns.
Signature authority has its own rules and exceptions. Review our FBAR signature-authority guide if you can control account funds without owning them.
Warning: Part III does not replace FBAR or Form 8938. Those filings use different thresholds, asset definitions, and filing systems.
Special cases: when the norm doesn't apply
Special Schedule B rules for 2025 can change how interest or dividends are listed. Nominee income, seller financing, bond adjustments, and foreign-account disclosures can require details beyond a simple payer total, even when taxable interest and ordinary dividends do not exceed $1,500.
The following 4 cases show how the entry can change:
- Nominee interest: A Form 1099-INT is issued in your name, but part belongs to a co-owner. List the full amount, then show “Nominee Distribution” before line 2.
- Nominee dividends: A Form 1099-DIV is issued to you for dividends that belong partly to another owner. Report the full amount, then show the nominee adjustment before line 6.
- Seller financing: A buyer pays you interest on a home you sold and uses it as a residence. List the buyer first and include the required identifying information.
- Accrued interest or OID: A reported amount needs an IRS-permitted adjustment. Use the specific “Accrued Interest” or “OID Adjustment” notation in the payer-listing area.
A bank may request a taxpayer form before reporting income. See what to do when a bank or platform asks for a Form W-9 or W-8.
Foreign institutions may issue statements rather than US tax forms.
See tax documents from countries with no personal income tax for records that can support a US return.
How to complete Schedule B (Form 1040) (step-by-step)
The 2025 Schedule B has 3 parts: interest, ordinary dividends, and foreign accounts or trusts. Start with Forms 1099-INT, 1099-OID, 1099-DIV, foreign statements, and account records, then reconcile each payer before transferring the final Part I and Part II totals to Form 1040.
The following 5 items are useful before you start:
- Forms 1099-INT and 1099-OID, plus foreign interest statements.
- Forms 1099-DIV, plus foreign dividend statements.
- Records for nominee income, bond adjustments, or Form 8815.
- Foreign account ownership, signature-authority, and peak-balance records.
- Foreign-trust records relevant to line 8.
Complete the form in 4 steps:
- List taxable interest and required adjustments in Part I.
- List ordinary dividends and nominee adjustments in Part II.
- Answer the Part III foreign-account and foreign-trust questions.
- Reconcile line 4 to Form 1040 line 2b and line 6 to Form 1040 line 3b.
Check before moving on: Box 1b qualified dividends are already inside box 1a ordinary dividends. Do not add box 1b to the Schedule B total.
Part I – Interest income (lines 1–4)
Part I lists taxable interest for 2025 and calculates the amount that reaches Form 1040 line 2b. Line 1 lists payers and adjustments, line 2 totals line 1 after required adjustments, line 3 shows a qualifying savings-bond exclusion, and line 4 is taxable interest.
The line map below follows the 2025 IRS Schedule B instructions, including nominee treatment in the line 1 listing area.
| Line | What to enter |
|---|---|
| 1 | Each taxable-interest payer and amount; show required adjustments beneath the payer listings |
| 2 | Total of line 1 after nominee or other permitted adjustments |
| 3 | Excludable Series EE or I savings-bond interest from Form 8815 |
| 4 | Line 2 minus line 3; transfer to Form 1040 line 2b |
Based on our client scenario at TFX: line 1 lists $900 and $800 of interest, then subtracts a $200 nominee distribution adjustment. Line 2 is $1,500, line 3 is $0, and line 4 is $1,500.
Foreign withholding can affect credit reporting even when the interest itself belongs on Schedule B. See our foreign withholding forms guide.
Part II – Ordinary dividends (lines 5–6)
Part II reports ordinary dividends for 2025. Line 5 lists each payer and ordinary dividends, usually from Form 1099-DIV box 1a; line 6 adds those amounts and moves the total to Form 1040 line 3b. Qualified dividends remain included in that line 6 total.
The following 2 lines complete Part II:
- Line 5: list each payer and ordinary-dividend amount, including the qualified portion already contained in box 1a.
- Line 6: total line 5 and transfer it to Form 1040 line 3b.
Based on our client scenario at TFX: a broker reports $3,000 in box 1a and $2,200 in box 1b. Line 5 and line 6 use $3,000; Form 1040 line 3a separately shows $2,200.
Part III – Foreign accounts and trusts (lines 7–8)
Part III is a disclosure section for 2025, not an income calculation. Line 7 asks about foreign financial accounts and whether an FBAR is required; line 8 asks about specified foreign-trust activity. An FBAR is separate and uses an aggregate balance threshold above $10,000.
Use the following 4 yes-or-no checks for Part III:
- Did you have a financial interest in a foreign financial account at any time in 2025?
- Did you have signature authority over a foreign financial account?
- Did aggregate reportable foreign accounts exceed $10,000 at any point in 2025?
- Did you receive a foreign-trust distribution or act as a grantor or transferor to a foreign trust?
If an FBAR is required for 2025, it was due April 15, 2026, with an automatic extension to October 15, 2026. It is filed electronically with FinCEN, not attached to Form 1040.
Warning: A “Yes” on Schedule B does not file the FBAR for you, and a “No” to the FBAR question does not erase a separate Form 8938 obligation.
Schedule B and Form 1040: where the totals go
For the 2025 return, the Schedule B-to-Form 1040 transfer map has 2 income totals: line 4 goes to Form 1040 line 2b, and line 6 goes to line 3b. Qualified dividends stay in line 6 and also appear on Form 1040 line 3a; Part III sends no dollar total.
Two Schedule B totals move to Form 1040; Part III is disclosure-only.
| Schedule B line | Destination on Form 1040 | Notes |
|---|---|---|
| Line 4 | Line 2b | Taxable interest |
| Line 6 | Line 3b | Ordinary dividends, including any qualified portion |
| No Schedule B line | Line 3a | Qualified-dividend portion reported separately |
| Part III | No dollar destination | Foreign-account and trust disclosures only |
Foreign interest and dividends follow the same US reporting lines even when paid abroad. See where foreign income is reported on Form 1040 for the wider return map.
Schedule B and foreign accounts – what US expats must know
For 2025, any foreign financial account can make Part III relevant even if it earned $0 and held less than $10,000. FBAR uses a separate aggregate threshold above $10,000, while Form 8938 uses higher asset thresholds that vary by filing status and whether the taxpayer lives abroad.
Schedule B has no minimum balance for its foreign-account question; FBAR and Form 8938 use separate thresholds.
| Filing | Purpose | Threshold | Filing location | Common mistake |
|---|---|---|---|---|
| Schedule B Part III | Foreign-account/trust disclosure | No account-balance minimum | With Form 1040 | Treating $10,000 as the Schedule B threshold |
| FBAR | Report foreign financial accounts | Aggregate accounts over $10,000 at any time | FinCEN BSA e-file | Filing it with the tax return |
| Form 8938 | Report specified foreign financial assets | Varies by status and residence | With Form 1040 | Assuming FBAR filing replaces it |
For a specified individual living abroad, Form 8938 is triggered above $200,000 on December 31 or above $300,000 at any time if not filing jointly. For joint filers abroad, the thresholds are $400,000 and $600,000.
Signature authority can affect Schedule B and FBAR even if you do not own the account. Schedule B question 7a applies its own instructions, while FBAR has separate signature-authority exceptions.
As of August 2026, the current eCFR table lists $16,536 for a non-willful FBAR violation and $165,353 as the adjusted willful dollar amount. The table was last amended by the January 17, 2025 inflation rule.
A willful FBAR penalty can be the greater of the applicable adjusted dollar amount or 50% of the account balance at the time of the violation, subject to the statute and case facts.
Schedule B vs FBAR vs Form 8938
Schedule B, FBAR, and Form 8938 serve 3 different reporting jobs in 2025. Schedule B is part of Form 1040, FBAR is filed separately with FinCEN when aggregate foreign accounts exceed $10,000, and Form 8938 is attached to Form 1040 when specified foreign assets exceed its threshold.
A taxpayer may need all 3 filings for the same 2025 accounts because each rule tests something different.
| Form | Purpose | Threshold | Where filed | Attached to 1040? |
|---|---|---|---|---|
| Schedule B Part III | Answer foreign-account and trust questions | No balance minimum for account question; Part III also required if interest or dividends exceed $1,500 | IRS with tax return | Yes |
| FBAR, FinCEN Form 114 | Report foreign financial accounts | Aggregate value over $10,000 at any time | FinCEN BSA e-file | No |
| Form 8938, FATCA | Report specified foreign financial assets | Depends on filing status and residence | IRS with tax return | Yes |
The following 3 checks help identify which filing applies:
- Any foreign financial account? Review Schedule B Part III.
- Aggregate reportable foreign accounts over $10,000 at any time? Review FBAR.
- Specified foreign financial assets above your Form 8938 threshold? Review Form 8938.
Where to get Schedule B (Form 1040)
The 2025 Schedule B is available for free from the IRS and should be attached to Form 1040 or 1040-SR when required. For a 2025 return filed in 2026, use the 2025 revision rather than a prior-year copy, and follow the 2025 Schedule B instructions.
The following 3 steps help you get the right version:
- Open the IRS Schedule B page and confirm the form shows tax year 2025.
- Open the matching 2025 instructions before entering payer adjustments or Part III answers.
- Keep the completed schedule with the same return year as Form 1040.
Our US tax forms for expats guide explains other forms that can accompany a 2025 expat return.
If you e-file, tax software transmits Schedule B with Form 1040 when required. Paper filers attach the schedule to the return. See our guide to filing US taxes online from abroad.
IRS form check: Confirm “2025” appears on Schedule B before using it for a 2025 return filed in 2026.
Common mistakes when filing Schedule B
The most common 2025 Schedule B errors are specific: double-counting the qualified-dividend portion, omitting Form 1040 line 3a, answering Part III incorrectly, misplacing nominee adjustments, or treating Schedule B as a substitute for FBAR or Form 8938. Each can distort the return or disclosure.
The following 5 mistakes are worth checking before filing:
- Adding qualified dividends to ordinary dividends a second time instead of treating box 1b as a subset of box 1a.
- Leaving Form 1040 line 3a blank when qualified dividends should be reported there.
- Answering “No” to line 7a question 1 because an account stayed below $10,000.
- Putting a nominee adjustment on the wrong line instead of in the payer-listing area.
- Assuming Schedule B, FBAR, and Form 8938 are interchangeable.
Based on our client scenario at TFX: box 1a is $4,200 and box 1b is $3,800. Adding both would report $8,000 of ordinary dividends instead of $4,200, overstating ordinary dividends by $3,800.
Before filing, use the following 4 checks:
- Reconcile each Part I payer to the final line 4 total.
- Reconcile each Part II payer to the final line 6 total.
- Confirm line 3a separately includes the qualified-dividend portion.
- Recheck Part III against foreign-account, FBAR, and Form 8938 facts.
If an FBAR was filed with wrong account data, see how to fix common FBAR mistakes.
If the IRS later sends a notice about mismatched income, follow our guide on what to do after receiving an IRS letter.
What happens if you miss Schedule B (Form 1040) reporting?
Missing Schedule B rarely creates its own penalty – the exposure comes from what Schedule B was supposed to disclose.
If your taxable interest or ordinary dividends were reported correctly on Form 1040 lines 2b and 3b but the schedule itself wasn't attached, the IRS commonly catches the gap through 1099 matching and may send a notice asking you to file it.
If income was left off the return entirely, you're looking at the standard underreporting consequences: interest on the unpaid tax from the original due date, a possible accuracy-related penalty of 20% of the underpayment under Internal Revenue Code Section 6662, and potentially a failure-to-file or failure-to-pay penalty if the return itself was late.
If a Part III foreign-account question was missed and it should have led to an FBAR filing, the risk is separate and higher: FBAR penalties run up to $16,536 (2025) per non-willful violation, or the greater of $165,353 (2025) or 50% of the account balance for a willful violation.
- File Form 1040-X for the affected year, attaching a completed Schedule B, if the rest of the original return is correct.
- If your interest, dividends, or other foreign-account income was already reported and taxed correctly on your return, and only the FBAR itself was missed, the Delinquent FBAR Submission Procedures generally let you file the late FinCEN Form 114 through FinCEN's BSA E-Filing System, along with a statement explaining the late filing, with no penalty – provided you haven't already been contacted by the IRS about it.
- Check whether Streamlined Filing Compliance Procedures fit your situation: they're available when the omission was non-willful and spans multiple years or forms – SFOP if you meet the 330-day non-residency test, SDOP if you're filing from inside the US.
- Confirm you're not already under IRS civil examination or criminal investigation, and haven't already been contacted by the IRS about the missing filings, before pursuing either path – both are unavailable once that contact has happened.
- If you're unsure whether your situation is non-willful or willful, get a CPA's read before filing anything – that distinction determines which path applies.
Bottom line: Why Schedule B matters
For a 2025 return filed in 2026, Schedule B ties payer-level interest and dividend details to Form 1040 and captures Part III disclosures. The $1,500 trigger is only 1 route into the form; qualified dividends also appear on line 3a.
The following 5 rules are the practical takeaway:
- File Schedule B when taxable interest or ordinary dividends exceed $1,500 or another IRS trigger applies.
- List taxable interest by payer in Part I and transfer line 4 to Form 1040 line 2b.
- List ordinary dividends by payer in Part II and transfer line 6 to Form 1040 line 3b.
- Report the qualified-dividend portion separately on Form 1040 line 3a without subtracting it from Schedule B.
- Answer Part III separately from any FBAR or Form 8938 filing.
Accurate cross-form reporting matters because mismatches can lead to notices or further review. Our guide to common IRS audit triggers for expats explains other issues that can attract scrutiny.
FAQ
You must file Schedule B if taxable interest or ordinary dividends exceeded $1,500, or if another IRS trigger applies. Other triggers include seller-financed mortgage interest, nominee income, specified bond adjustments, foreign financial accounts, and certain foreign-trust activity.
Yes, as part of ordinary dividends. Schedule B line 5 uses total ordinary dividends, usually from Form 1099-DIV box 1a. The qualified portion remains inside that total and is also reported separately on Form 1040 line 3a.
Yes. Schedule B Part III asks whether you had a financial interest in or signature authority over a foreign financial account during 2025. The question can require a “Yes” even if the account earned $0 and was below the $10,000 FBAR threshold.
No. Schedule B is attached to Form 1040. FBAR FinCEN Form 114, is filed separately with FinCEN and is required when aggregate reportable foreign accounts exceed $10,000 at any time during 2025.
Schedule B reports interest, ordinary dividends, and Part III disclosures. Form 8938 reports specified foreign financial assets over thresholds that vary by filing status and residence. A US expat can need both forms, plus FBAR, for the same year.
It is a filing trigger, not an exemption. More than $1,500 of taxable interest or ordinary dividends can require Schedule B, while smaller amounts are still taxable and reported directly on Form 1040 unless another Schedule B trigger applies.
Schedule B line 4 goes to Form 1040 line 2b, and line 6 goes to line 3b. Qualified dividends are included in line 6 but are also shown separately on Form 1040 line 3a. Part III transfers no dollar amount.
US expats need Schedule B when the same IRS triggers apply to them. A foreign financial account can require Part III even with $0 of income, while FBAR and Form 8938 must be tested separately under their own thresholds.
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