Instructions Sch B (1040)

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Department of the Treasury
Internal Revenue Service

2023 Instructions for Schedule B

TREASURY/IRS
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October 5, 2023

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 transferor to, a foreign trust.

Section references are to the Internal
Revenue Code unless otherwise noted.

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 information.
For more information on stated interest, original issue discount (OID), market discount, contingent payment debt
instruments, and premium, see Pub. 550
and Pub. 1212.

Future Developments

For the latest information about developments related to Schedule B (Form
1040) and its instructions, such as legislation enacted after they were published,
go to IRS.gov/ScheduleB.

Specific
Instructions
You can list more than one pay-

TIP er on each entry space for lines
1 and 5, but be sure to clearly
show the amount paid next to each payer’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 taxable interest. Taxable interest generally
should be shown on your Forms
1099-INT, Forms 1099-OID, or substitute statements. Include interest from
series EE, H, HH, and I U.S. savings

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, address, 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 received as a nominee (that is, in your
name, but the interest actually belongs
to someone else), report the total on
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Jun 14, 2023

Cat. No. 70541Y

line 1. Do this even if you later distributed 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

TIP nominee, you must give the actual 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 Returns 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 interest, follow the rules earlier under Nominees to see how to report the accrued interest. But identify the amount to be subtracted 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-

ment.” However, if the payer reported to
you a net amount of OID on the bond reflecting the offset of the gross amount of
OID by any acquisition premium, no reduction of the amount of OID income
reported to you by the payer may be
needed on Schedule B for the bond.

If an amount is shown in box 9 of
Form 1099-INT, you must generally report 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 series EE or I U.S. savings bonds issued after 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 III. Foreign Accounts
and Trusts
Regardless of whether you are

TIP required to file FinCEN Form
114 (FBAR), you may be required 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 information.

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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 Adjustment.” However, if the payer reported to you a net amount of interest income on the bond reflecting the offset of
the gross amount of interest income by
the amortizable bond premium, no reduction 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 municipal 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 report the net amount of tax-exempt interest 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 information about OID, bond premium, and acquisition 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.

Part II. Ordinary Dividends

You may have to file Form 5471

TIP if, in 2023, you were an officer

or director of a foreign corporation. 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 instructions at IRS.gov/Form5471.

Line 5. Report on line 5 all of your ordinary 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 dividends you received as a nominee (that
is, in your name, but the ordinary dividends 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

TIP nominee, you must give the actual 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 Returns and the Instructions for Form
1099-DIV.

B-2

Line 7a—Question 1. Check the “Yes”
box if at any time during 2023 you had a
financial interest in or signature authority 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 account includes, but isn't limited to, a securities, brokerage, savings, demand,
checking, deposit, time deposit, or other
account maintained with a financial institution (or other person performing the
services of a financial institution). A financial account also includes a commodity futures or options account, an insurance policy with a cash value (such
as a whole life insurance policy), an annuity policy with a cash value, and
shares in a mutual fund or similar
pooled fund (that is, a fund that is available to the general public with a regular
net asset value determination and regular redemptions).
Financial account located in a foreign country. A financial account is located in a foreign country if the account
is physically located outside of the United 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 account. An account maintained with a
branch of a foreign bank that is physically located in the United States isn't a
foreign financial account.
Signature authority. “Signature authority” is the authority of an individual
(alone or in conjunction with another individual) to control the disposition of assets held in a foreign financial account
by direct communication (whether in
writing or otherwise) to the bank or other financial institution that maintains the

financial account. See the FinCEN Form
114 instructions for exceptions. Don't
consider the exceptions relating to signature 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 required to file the form.
If you checked the “Yes” box to
Question 2 on line 7a, you must electronically file FinCEN Form 114 with
Treasury's Financial Crimes Enforcement Network. A U.S. person that has a
financial interest in or signature authority 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 information about FinCEN Form 114, see
FINCEN.gov.

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 transferor to, a foreign trust that existed during 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 ensuring 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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If you are required to file FinCEN Form 114 but don't propCAUTION 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 information 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 FinCEN Form 114, list the name(s) of the
foreign country or countries in the space

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