| Instructions for Form 1040 Schedule A & Schedule B |
2006 Tax Year |
Instructions for Schedule B, Interest and Ordinary Dividends
This is archived information that pertains only to the 2006 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
Use Schedule B (Form 1040) if any of the following applies.
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You had over $1,500 of taxable interest.
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Any of the Special Rules listed in the instructions for line 1 apply to you.
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You are claiming the exclusion of interest from series EE or I U.S. savings bonds issued after 1989.
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You had over $1,500 of ordinary dividends.
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You received ordinary dividends as a nominee.
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You had a foreign account or you received a distribution from, or were a grantor of, or transferor to, a foreign trust. Part
III of the
schedule has questions about foreign accounts and trusts.
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.
Report on line 1 all of your taxable interest. Interest should be shown on your
Forms 1099-INT,
Forms 1099-OID, or substitute statements. Include interest from series EE and I U.S. savings bonds. List each payer's name
and show the amount.
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 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.
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.
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 Forms 1099, 1098, 5498, and W-2G and the
Instructions for Forms 1099-INT and 1099-OID.
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 on Schedule B. 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, follow the rules earlier under
Nominees to see how to report the OID on Schedule B. But identify the amount to be subtracted as “OID Adjustment.”
If you are reducing your interest income on a bond by the amount of amortizable bond premium, follow the rules earlier under
Nominees to see how to report the interest on Schedule B. But identify the amount to be subtracted as “ABP Adjustment.”
Excludable Interest on Series EE and I U.S. Savings Bonds Issued After 1989
If, during 2006, 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
You may have to file
Form 5471 if, in 2006, you were an officer or director of a foreign corporation. You may also have to file
Form 5471 if, in 2006, 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.
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. List each payer's name and show the amount.
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 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 Forms 1099, 1098, 5498, and W-2G and the
Instructions for Form 1099-DIV .
Part III. Foreign Accounts and Trusts
Check the “Yes” box on line 7a if either (1) or (2) below applies.
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You own more than 50% of the stock in any corporation that owns one or more foreign bank accounts.
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At any time during 2006 you had an interest in or signature or other authority over a financial account in a foreign country
(such as a bank
account, securities account, or other financial account).
For line 7a, item (2) does not apply to foreign securities held in a U.S. securities account.
Exceptions.
Check the “ No” box if any of the following applies to you.
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The combined value of the accounts was $10,000 or less during the whole year.
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The accounts were with a U.S. military banking facility operated by a U.S. financial institution.
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You were an officer or employee of a commercial bank that is supervised by the Comptroller of the Currency, the Board of Governors
of the
Federal Reserve System, or the Federal Deposit Insurance Corporation; the account was in your employer's name; and you did
not have a personal
financial interest in the account.
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You were an officer or employee of a domestic corporation with securities listed on national securities exchanges or with
assets of more
than $10 million and 500 or more shareholders of record; the account was in your employer's name; you did not have a personal
financial interest in
the account; and the corporation's chief financial officer has given you written notice that the corporation has filed a current
report that includes
the account.
See
Form TD F 90-22.1 to find out if you are considered to have an interest in or signature or other authority over a financial
account in a foreign
country (such as a bank account, securities account, or other financial account). You can get
Form TD F 90-22.1 by visiting the
IRS website at www.irs.gov/pub/irs-pdf/f90221.pdf.
If you checked the “ Yes” box on line 7a, file
Form TD F 90-22.1 by June 30, 2007, with the Department of the Treasury at the address shown on that form. Do not attach it
to Form 1040.
If you are required to file
Form TD F 90-22.1 but do not do so, you may have to pay a penalty of up to $10,000 (more in some cases).
If you checked the “Yes” box on line 7a, 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.
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 for details.
If you were the grantor of, or transferor to, a foreign trust that existed during 2006, you may have to file Form 3520.
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