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Individual Income Tax Guide

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Purpose of Form
Use Schedule B if any of the following applies.

Line Instructions
You can list more than one payer on each entry space for lines 1 and 5, but be sure to clearly show the amount paid next to the 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 that are the same size as the printed schedule. Use the same format as lines 1 and 5, but show your totals on Schedule B. Be sure to 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, Interest Income, Forms 1099-OID, Original Issue Discount, or substitute statements. Include interest from series EE, H, HH, and I U.S. savings bonds and any accrued market discount that is includible in income. List each payer’s name and show the amount. Do not report any tax-exempt interest from box 8 or box 9 of Form 1099-INT on line 1. Instead, report the amount from box 8 on line 8b of Form 1040 or 1040A. If an amount is shown in box 9 of Form 1099-INT, you generally must report it on line 12 of Form 6251, Alternative Minimum Tax - Individuals. See the Instructions for Form 6251 for more details. For more information on market discount and other investment income, see Publication 550, Investment Income and Expenses. 

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 spcial security number (SSN). You must also let the buyer know your SSN. If you do not show the buyer’s name, address, and SSN, or let the buyer know your SSN, you may have to pay a $50 penalty. 

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 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. 

NOTE: If you received interest as a nominee, you must give the actual owner a Form 1099-INT unless the owner is your spouse. You must also file a Form 1096 and a Form 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 on Form 1099-OID, Original Issue Discount, follow the rules earlier under Nominees to see how to report the OID. But identify the amount to be subtracted as “OID Adjustment.” 

Amortizable bond premium: If you are reducing your interest income on a bond by the amount of amortizable bond premium, follow the rules under Nominees to see how to report the interest. But identify the amount to be subtracted as “ABP Adjustment.” 

Line 3: If, during the year, 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 for details. 

Part II. Ordinary Dividends

NOTE: You may have to file Form 5471, Information Return of U.S. Persons With Respect  To Certain Foreign Corporations, if, during the year, you were an officer or director of a foreign corporation. You may also have to file Form 5471 if, during the year, 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. 

Line 5: Report on line 5 all of your ordinary dividends. This amount should be shown in box 1a of your Forms 1099-DIV, Dividends and Distributions, or substitute statements. List each payer’s name and show the amount. 

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. 

NOTE: If you received dividends as a nominee, you must give the actual owner a Form 1099-DIV unless the owner is your spouse. You must also file a Form 1096 and a Form 1099-DIV with the IRS. For more details, see the General Instructions for Certain Information Returns and the Instructions for Form 1099-DIV. 

Part III. Foreign Accounts and Trusts

IMPORTANT: Regardless of whether you are 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. 

Line 7a–Question 1: Check the “Yes” box if at any time during the year 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 are not required to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). 

Financial account: A financial account includes, but is not 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 United States 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 is not 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. Do not 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 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 are not required to file the form. If you checked the “Yes” box to Question 2 on line 7a, FinCEN Form 114 must be electronically filed with the Financial Crimes Enforcement Network (FinCEN) at the following website: http://bsaefiling. fincen.treas.gov/main.html. Do not attach FinCEN Form 114 to your tax return. To be considered timely, FinCEN Form 114 must be filed by April 15, 2017. A six-mpnth extension fo time to file is available.

NOTE: If you are required to file FinCEN Form 114 but do not properly 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 percent 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, enter the name of the foreign country or countries in the space 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 generally is considered to be a distribution. See Form 3520, Annual Return To Report Transactions With  Foreign Trusts and Receipt of Certain Foreign Gifts  for details. If you were the grantor of, or transferor to, a foreign trust that existed during 2016, you may have to file Form 3520. Do not attach Form 3520 to Form 1040. 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, Annual Information Return of Foreign Trust With a U.S. Owner (Under Section 6048(b)),  is due on March 15, 2017, for a calendar year trust. The instructions to Form 3520-A have more details.

Table of Contents

Part I: Interest

Part II: Ordinary Dividends

Part III: Foreign Accounts and Trusts

Chapter 17  Schedule B: Interest & Dividends