Schedule B
Interest and Ordinary Dividends
Who Must File
US taxpayers who receive more than $1,500 in taxable interest or ordinary dividends during the year, or who have a financial interest in or signature authority over a foreign financial account.
Deadline
Filed with Form 1040 by April 15 (or extended deadline)
Penalty
No separate penalty for Schedule B; penalties apply to underreporting income on Form 1040
Step-by-Step Filing Instructions
Gather all 1099-INT forms for US interest income and Canadian T5 slips for Canadian interest income.
Gather all 1099-DIV forms for US dividends and Canadian T5/T3 slips for Canadian dividends.
List each payer and the amount of interest received in Part I, converting Canadian interest to USD.
List each payer and the amount of ordinary dividends in Part II, converting Canadian dividends to USD.
Complete Part III, answering the foreign account questions (required if you have any Canadian accounts).
Indicate the countries where you hold foreign accounts (Canada).
Attach Schedule B to your Form 1040.
Tips & Best Practices
Even if your interest and dividends are below $1,500, you must file Schedule B if you have foreign accounts.
Canadian T5 slip interest must be converted to USD using the IRS annual average exchange rate.
The Part III foreign account question is separate from FBAR and Form 8938 requirements.
Qualified dividends from Canadian corporations may be eligible for the lower US tax rate if the holding period is met.
Report gross interest before any Canadian withholding; claim the Canadian withholding as a foreign tax credit on Form 1116.
Frequently Asked Questions
Do I report Canadian bank interest on Schedule B?
Yes. US tax residents must report worldwide interest income. Canadian bank interest from savings accounts, GICs, and other deposits is reported in Part I of Schedule B, converted to USD.
Are Canadian dividends qualified dividends for US tax purposes?
Dividends from Canadian corporations may qualify for the lower US qualified dividend rate if the stock is held for the required holding period and the corporation is eligible under the Canada-US Tax Treaty.
Why does Part III ask about foreign accounts?
Part III is a screening question to identify taxpayers who may need to file FBAR (FinCEN 114) and Form 8938. Answering yes does not replace the need to file those separate forms if the thresholds are met.
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