You need Schedule B for 2026 if your taxable interest or ordinary dividends were more than $1,500 for the year, or if you had a financial interest in or signature authority over a foreign financial account, or received a distribution from a foreign trust. Schedule B lists each payer of interest and dividends and asks the foreign account questions. It attaches to the Form 1040 you file by April 15, 2027. Here is how to complete it and how it connects to FBAR reporting.
Who Must File Schedule B for 2026
- Taxable interest over $1,500.
- Ordinary dividends over $1,500.
- Seller-financed mortgage interest received from a buyer who used the property as a home.
- Accrued interest from a bond bought between interest dates, nominee distributions, or original issue discount adjustments.
- Excluding Series EE or I savings bond interest for education using Form 8815.
- Any foreign financial account or foreign trust, regardless of the amount of interest or dividends.
The Three Parts of Schedule B
| Part | What you report | Flows to |
|---|---|---|
| Part I: Interest | Each payer and amount of taxable interest from Forms 1099-INT and 1099-OID, plus other interest | Form 1040, line 2b |
| Part II: Ordinary dividends | Each payer and amount of ordinary dividends from Form 1099-DIV, box 1a | Form 1040, line 3b |
| Part III: Foreign accounts and trusts | Yes/no questions on foreign accounts, the FBAR requirement and foreign trusts | Disclosure only |
Qualified dividends are included in ordinary dividends on Schedule B; the qualified portion goes separately on line 3a. Tax-exempt interest from municipal bonds is reported on line 2a of Form 1040, not on Schedule B. See our guide to how interest income is taxed in 2026 and Form 1099-DIV.
Part III and the FBAR
If the total value of your foreign financial accounts exceeded $10,000 at any time during 2026, you generally must file FinCEN Form 114, the Report of Foreign Bank and Financial Accounts (FBAR), electronically with FinCEN. The FBAR is due April 15, 2027, with an automatic extension to October 15, 2027. Answering “Yes” on Schedule B Part III does not file the FBAR for you. Penalties for failing to file an FBAR can be severe, so this is the most important part of the form for anyone with money abroad. Some taxpayers with larger foreign assets must also file Form 8938 with their return.
What Counts as a Foreign Financial Account?
- Bank checking and savings accounts held outside the United States.
- Foreign brokerage and securities accounts.
- Foreign mutual funds and certain foreign pension or retirement accounts.
- Accounts you can sign on, even if the money is not yours, such as an employer’s foreign account or an elderly parent’s account.
Accounts held at U.S. branches of foreign banks generally are not foreign accounts, while foreign branches of U.S. banks generally are. Digital asset accounts on foreign exchanges are an evolving area, so check the current FBAR instructions.
Form 8938 Thresholds
Separate from the FBAR, Form 8938 (Statement of Specified Foreign Financial Assets) is filed with your tax return when foreign assets exceed certain levels. For taxpayers living in the United States, the thresholds are more than $50,000 at year-end or $75,000 at any time for single filers, and more than $100,000 at year-end or $150,000 at any time for married couples filing jointly. Thresholds are higher for people living abroad. Many taxpayers with foreign accounts must file both the FBAR and Form 8938.
How Schedule B Income Is Taxed
Interest reported on Schedule B for 2026 is taxed at ordinary income rates, from 10% to 37%. Ordinary dividends are also taxed at ordinary rates, except the qualified portion, which gets the 0%, 15% or 20% capital gains rates. High earners may owe the additional 3.8% net investment income tax on both. Because Schedule B income raises AGI, it can also affect the taxation of Social Security benefits and income-based deductions such as the new senior deduction.
Example: Completing Schedule B for 2026
A married couple receives three Forms 1099-INT showing $900, $650 and $210 of interest, plus a 1099-DIV showing $1,200 of ordinary dividends. Total interest is $1,760, over $1,500, so they must file Schedule B. They list the three banks in Part I and total $1,760 on line 2b. Dividends are under $1,500, but because they are already filing Schedule B they list the fund company in Part II and report $1,200 on line 3b. They have no foreign accounts, so they check “No” in Part III.
Special Situations
- Nominee interest or dividends: If you received a 1099 for income that belongs to someone else, list the full amount, then subtract the nominee amount on a separate line labeled “Nominee Distribution.”
- Accrued interest: When you buy a bond between interest dates, subtract the interest you paid the seller.
- Bond premium amortization: Subtract amortized premium on taxable bonds if you elected to amortize.
- Savings bonds for education: Use Form 8815 to exclude qualifying interest, then subtract it on Schedule B.
- Seller financing: List the buyer’s name, address and Social Security number.
Tips for Filing Schedule B for 2026
- Gather every Form 1099-INT, 1099-OID and 1099-DIV before filing; brokers may send corrected forms into March.
- Report interest even if you did not receive a 1099. Banks generally issue 1099-INT only at $10 or more, but all interest is taxable.
- Double-check the foreign account question. Many people with a foreign bank, brokerage or pension account answer “No” by mistake.
- Keep statements showing each account’s maximum value during the year for FBAR purposes.
Our earlier guide to reporting interest and dividend income covers the basics.
Frequently Asked Questions
Do I need to file Schedule B?
Only if taxable interest or ordinary dividends exceed $1,500, you have certain special items, or you have foreign financial accounts or foreign trust activity.
Is the Schedule B threshold $1,500 for 2026?
Yes. The $1,500 threshold has not changed.
Does Schedule B file my FBAR?
No. The FBAR is filed separately with FinCEN through its BSA E-Filing System.
Where do qualified dividends go?
They are included in ordinary dividends on Schedule B, and the qualified amount is entered on Form 1040, line 3a. See qualified dividends for 2026.
Final Thoughts
Schedule B for 2026 is short, but Part III carries real consequences for anyone with foreign accounts. List every payer, report all interest even without a 1099, and file an FBAR when required.
Have questions about how this applies to your situation? Book a free consultation with Aric and get answers from a CPA.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
