Instructions for Schedules A & B (Form 1040) (Revised 2004) |
2004 Tax Year |
Itemized Deductions and Interest and Dividend Income
Instructions for Schedule B, Interest and Ordinary Dividends
Table of Contents
Introduction
Use Schedule B (Form 1040) if any of the following apply.
- You had over $1,500 of taxable interest.
- Any of the Special Rules listed in the instructions for line 1 apply to you.
- You are claiming the exclusion of interest from series EE or I U.S. savings bonds issued after 1989.
- You had over $1,500 of ordinary dividends.
- You received ordinary dividends as a nominee.
- 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 may 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.
What's New
You may have to pay a penalty of up to $10,000 (more in some cases) if you are required to file Form TD F 90-22.1 (for foreign
accounts and
trusts), but do not do so. See the instructions for lines 7a and 7b on page B-2.
Part I. Interest
Line 1
Interest
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.
Itemized Deductions Worksheet—Line 28
1.
|
Enter the total of the amounts from Schedule A, lines 4, 9, 14, 18, 19, 26, and 27
|
1.
|
|
|
2.
|
Enter the total of the amounts from Schedule A, lines 4, 13, and 19, plus any gambling and
casualty or theft losses included on line 27.
|
2.
|
|
|
|
|
Be sure your total gambling and casualty or theft losses are clearly identified on the
dotted lines next to line 27.
|
|
|
|
3.
|
Is the amount on line 2 less than the amount on line 1?
|
|
|
|
|
|
|
No.
|
|
Your deduction is not limited. Enter the amount from line 1 above on Schedule A, line 28.
|
|
|
|
|
Yes.
|
Subtract line 2 from line 1
|
3.
|
|
|
4.
|
Multiply line 3 by 80% (.80)
|
4.
|
|
|
|
|
5.
|
Enter the amount from Form 1040, line 37
|
5.
|
|
|
|
|
6.
|
Enter: $142,700 ($71,350 if married filing separately)
|
6.
|
|
|
|
|
7.
|
Is the amount on line 6 less than the amount on line 5?
|
|
|
|
|
|
|
No.
|
|
Your deduction is not limited. Enter the amount from line 1 above on Schedule A, line 28.
|
|
|
|
|
|
|
Yes.
|
Subtract line 6 from line 5
|
7.
|
|
|
|
|
8.
|
Multiply line 7 by 3% (.03)
|
8.
|
|
|
|
|
9.
|
Enter the smaller of line 4 or line 8
|
9.
|
|
|
10.
|
Total itemized deductions. Subtract line 9 from line 1. Enter the result here and on Schedule
A, line 28
|
10.
|
|
|
|
|
|
|
|
|
|
|
|
Special Rules
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.
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.
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.
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 on Schedule B. But identify the amount to be subtracted as “Accrued Interest.”
Tax-Exempt Interest
If you received a Form 1099-INT for tax-exempt interest, follow the rules earlier under Nominees to see how to report the interest on
Schedule B. But identify the amount to be subtracted as “Tax-Exempt 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.”
Amortizable Bond Premium
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.”
Line 3
Excludable Interest on Series EE and I U.S. Savings Bonds Issued After 1989
If, during 2004, 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 2004, you were an officer or director of a foreign corporation. You may also have to
file Form 5471 if,
in 2004, 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
Ordinary Dividends
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.
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.
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
Lines 7a and 7b
Foreign Accounts Line 7a
Check the “Yes” box on line 7a if either (1) or (2) next applies.
- You own more than 50% of the stock in any corporation that owns one or more foreign bank accounts.
- At any time during the year 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, (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.
- The combined value of the accounts was $10,000 or less during the whole year.
- The accounts were with a U.S. military banking facility operated by a U.S. financial institution.
- 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.
- You were an officer or employee of a domestic corporation with securities listed on national securities exchanges or with
assets of more
than $1 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/f9022-1.pdf.
If you checked the “ Yes” box on line 7a, file Form TD F 90-22.1 by June 30, 2005, 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 90-22.1 but do not do so, you may have to pay a penalty of up to $10,000 (more in some cases).
Line 7b
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.
Line 8
Foreign Trusts
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 2004, you may have to file Form 3520.
Previous | First | Next
SEARCH:
You can search for information in the entire Tax Prep Help section, or in the entire site. For a more focused search, put your search word(s) in quotes.
Instructions Index | Tax Prep Help Main | Home
|