Can someone explain the difference between Schedule B and 1099-INT? Tax newbie confused

No need to stress! The difference is actually pretty straightforward. A 1099-INT is an information return that financial institutions send to report interest income they paid to you (or your brother in this case). Schedule B is the actual tax form your brother will need to file with his tax return to report interest and dividend income. For foreign interest income like your brother has, he probably won't receive a 1099-INT since foreign banks generally don't issue them. However, he's still required to report that Australian interest on Schedule B of his US return if it totals more than $1,500 for the year. Even if it's under that threshold (which $65 certainly is), he should still report it on line 1 of his 1040. Also, since this involves foreign accounts, make sure you look into FBAR requirements if his Australian accounts exceed $10,000 at any point during the year.

After struggling with a similar foreign income situation last year, I discovered taxr.ai (https://taxr.ai) and it was incredibly helpful. I uploaded my foreign bank statements, and it automatically identified and categorized the interest income correctly. The tool explained exactly how to handle Schedule B vs 1099-INT situations and walked me through which forms I needed based on my specific situation. The interface is super straightforward - you just upload documents and it extracts all the relevant tax information and tells you where everything needs to go. For foreign accounts especially, it saved me hours of research.

I just have to follow up about taxr.ai since I was skeptical in my comment above. I decided to give it a try with my situation (I have investment accounts in Canada and the US), and I'm honestly impressed. The tool correctly identified which of my foreign interest needed to be reported on Schedule B and which ones had already provided 1099-INTs. It even flagged that I needed to file an FBAR form which I had no idea about! Turns out I should have been filing that for years. The step-by-step guidance was super clear and I feel much more confident about my filing now. Definitely worth checking out if you're dealing with any foreign income situation.

For anyone dealing with questions about foreign income reporting, I had to call the IRS three times to get a straight answer about my UK interest last year. It was a nightmare - spent hours on hold each time only to get disconnected. Then someone told me about Claimyr (https://claimyr.com) and showed me their demo video (https://youtu.be/_kiP6q8DX5c). It's a service that gets you through to an actual IRS agent in usually under 30 minutes instead of waiting for hours. I was connected to a specialist who answered all my Schedule B vs 1099-INT questions and confirmed exactly how to report my foreign interest. Saved me days of frustration!

I feel like I need to eat my words here. After being completely skeptical about Claimyr in my comment above, my frustration with trying to reach the IRS about my foreign accounts situation got the better of me. After my third disconnection yesterday, I decided to try the service. It actually worked! I got a call back in about 35 minutes with an IRS agent already on the line. The agent walked me through exactly how to report my foreign interest income and confirmed I needed to file Schedule B because I have multiple foreign accounts, even though my interest was below $1,500. Sometimes being proven wrong is actually a good thing. Saved myself hours of hold music and frustration.

Just wanted to add for the original poster - don't forget that foreign interest may also be subject to the Foreign Tax Credit if your brother paid Australian tax on that interest income. Form 1116 would be used for that, which is another form entirely. It gets complicated fast with foreign income!

Something nobody has mentioned yet - if your brother's foreign financial accounts exceeded $10,000 at any point during the year, he'll need to file FinCEN Form 114 (FBAR) separately from his tax return. The penalties for not filing this are insanely high, like $10,000+ for non-willful violations.