This guide covers IRS Form 1040 Schedule B for individuals, including US persons living in Australia. It does not cover Form 990 Schedule B (nonprofit contributions) or Census Schedule B (export classification).
We'll walk through which form version to use, who must file, how to complete each part, and how Schedule B differs from FBAR, Form 8938, and Australian tax reporting.
Key Takeaways
- Confirm whether "2026" means a 2026 tax-year form or a return filed in 2026.
- The $1,500 threshold isn't the only trigger; foreign accounts and special situations also require Schedule B.
- Qualified dividends sit inside ordinary dividends, so never count them twice.
- Schedule B replaces neither FBAR, Form 8938, nor any Australian filing.
What Is Schedule B and Which Form Does This Guide Cover?
Form 1040 Schedule B lists taxable interest, ordinary dividends, and certain foreign account and foreign trust disclosures. It has three parts:
- Part I: taxable interest by payer
- Part II: ordinary dividends by payer
- Part III: foreign accounts and trusts
Parts I and II feed totals into Form 1040. Part III is a disclosure section, not an income calculation.
Don't confuse it with its namesakes. Schedule B to Form 990 deals with organisational contributions, and the Census Schedule B classifies export commodities. Neither applies to an individual's return.
Who Must File Schedule B?
The income test
Per the 2025 instructions, you need Schedule B if taxable interest exceeds $1,500 or ordinary dividends exceed $1,500. The test applies to each category separately, not their combined total.
This is a filing trigger, not an exemption. Form 1040 still requires all taxable interest and dividends, even when Schedule B isn't needed.
Special triggers
Schedule B can be required below the threshold if any of these apply:
- Seller-financed mortgage interest, where the buyer used the property as a personal residence
- Accrued bond interest
- Original issue discount (OID) reported at less than the Form 1099-OID amount
- Interest reduced by amortisable bond premium
- Excluding Series EE or I savings-bond interest (Form 8815)
- Nominee income received on behalf of another owner
- A financial interest in, or signature authority over, a foreign financial account
- A distribution from, or grantor or transferor status with, a foreign trust
A foreign account matters even if it earned almost nothing. The question is about the account's existence and your connection to it.
Who this applies to in Australia
An Australian company doesn't automatically file Schedule B. A US citizen, green-card holder, or resident with a Form 1040 obligation might, based on personal financial activity. Australian residence doesn't remove US filing duties.
Intake checklist
Gather these before you start:
- Bank and brokerage statements, US and Australian
- Forms 1099-INT, 1099-DIV, and 1099-OID
- Bond and savings-bond records
- Nominee documentation
- Seller-financed property details
- Foreign trust paperwork
How to Complete Schedule B Part by Part
Start with source documents. Where Australian institutions issue no US forms, statements and year-end tax summaries become your records.
Part I: Taxable interest
Work through the interest lines in order:
- Line 1: list each payer and amount
- Line 2: enter the total
- Line 3: subtract any eligible Form 8815 exclusion
- Line 4: carry the net to Form 1040 line 2b
Tax-exempt interest goes on Form 1040 line 2a, not into the taxable total.
For Australian-source interest:
- Report in USD at a consistent rate. The IRS accepts any consistently applied posted rate and publishes yearly averages.
- Interest is reportable even without a Form 1099-INT.
- Keep records of foreign withholding and the conversion method.
Part II: Ordinary dividends
List payers on line 5 and the total on line 6. Form 1099-DIV box 1a usually supplies the figure. Carry that total to Form 1040 line 3b.
Qualified dividends (box 1b) sit inside ordinary dividends. They also appear on Form 1040 line 3a, but you do not add them again to the ordinary total. Reconcile broker or fund statements to the Schedule B total before moving on.
Capital gain distributions do not belong here. Report them on Form 1040 line 7a or Schedule D.
Part III: Foreign accounts and trusts
The 2025 form asks:
- Did you have a financial interest in, or signature authority over, a foreign financial account?
- If so, is an FBAR required?
- Which countries hold the accounts?
- Did you receive a distribution from, or act as grantor or transferor to, a foreign trust?
A "yes" answer does not file an FBAR or Form 8938 on its own. A yes on the trust question may require Form 3520. Treat each answer as a prompt for follow-up filing.
Schedule B and Foreign Reporting for Australian Filers
Schedule B, FBAR, and Form 8938
| Report | Purpose | Where filed |
|---|---|---|
| Schedule B Part III | Foreign account and trust questions | With Form 1040 |
| FBAR (FinCEN 114) | Foreign accounts above $10,000 aggregate at any time | FinCEN BSA E-Filing; due April 15, automatic extension to October 15 |
| Form 8938 | Specified foreign financial assets | Attached to the tax return |
| Form 3520 / 3520-A | Foreign trust transactions and ownership | Separate IRS filing |
Form 8938 thresholds for those qualifying as living abroad are higher: $200,000 at year-end or $300,000 at any time for single filers, and $400,000 / $600,000 for joint filers. One taxpayer may owe several of these reports.
Superannuation and other Australian arrangements
Treat each arrangement on its facts. These Australian products don't all follow the same US reporting rules:
- Bank accounts
- Brokerage accounts
- Insurance products
- Super funds
For super, the treaty's saving clause preserves US taxation of citizens. Rev. Proc. 2020-17 offers conditional relief from trust reporting, but it doesn't remove Form 8938 or FBAR duties, and it doesn't name Australia or superannuation.
Get fund-specific advice before deciding how a super fund is classified.
Foreign tax credit and the ATO
Australian tax paid may qualify for a Form 1116 credit, or a deduction instead. Separately, the ATO requires Australian tax residents to declare worldwide income on an Australian return. A US Schedule B doesn't satisfy that obligation.
Getting the records mapped
VJM Global is a Chartered Accountant firm that supports Australian businesses and US persons with accounting reconciliation and tax compliance coordination. The firm helps map foreign statements to US reporting lines and covers FBAR within its cross-border compliance work.
Where to Find the Correct 2026 Form and Avoid Common Errors
Pick the right version
The IRS Schedule B page lists the 2025 form as current, with a PDF and matching instructions. The 2026 form and instructions exist only as drafts marked "Do Not File."
So a return filed in 2026 for calendar 2025 uses the 2025 schedule. The 2026 drafts apply to tax year 2026, filed in 2027.
Filing and deadlines
Attach Schedule B to your paper Form 1040, or include it in your e-file. For 2025 returns filed in 2026:
- Regular due date: April 15, 2026
- Qualifying taxpayers abroad: automatic extension to June 15, 2026
- Form 4868 filed by June 15 generally extends the deadline to October 15, 2026
- Interest on unpaid tax runs from April 15 regardless of any extension
Final review checklist
- Reconcile every payer to its statement.
- Verify interest and dividend totals against Form 1040 lines 2b and 3b.
- Confirm qualified dividends aren't double-counted.
- Review Part III answers.
- Check whether FBAR, Form 8938, Form 3520, or Form 3520-A also apply.
Frequently Asked Questions
Where can I find the instructions for Form 1040 Schedule B in a PDF format?
Download the form and instructions from the IRS Schedule B page. Check the tax year printed on the PDF, and ignore anything marked "Draft."
Who must file the Schedule B?
Filers with taxable interest or ordinary dividends over $1,500 in either category. Foreign accounts, nominee income, certain bond adjustments, and foreign trust activity also trigger it.
What is Schedule B used for?
It lists taxable interest and ordinary dividends by payer. It also captures foreign account and foreign trust disclosures for qualifying Form 1040 filers.
Is Schedule B the same as FBAR or Form 8938?
No. Each has its own purpose, thresholds, and filing location. More than one can apply to the same person.
What income goes on Schedule B?
Taxable interest and ordinary dividends. Tax-exempt interest goes on line 2a, and capital gain distributions go on line 7a or Schedule D.
Do US citizens living in Australia need Schedule B?
Living in Australia doesn't end US filing duties. Whether you need Schedule B depends on your income, accounts, and other triggers.
