Can someone explain the difference between Schedule B and 1099-INT for foreign interest income?
I'm totally confused about Schedule B vs 1099-INT for a client situation. I've got a client who's a dual citizen (lives 100% in Canada but maintains US citizenship) and I'm preparing their US tax return. They've got about $65 of interest from Canadian banks, and I'm stuck on how to properly report this. What's the actual difference between Schedule B and 1099-INT? Is one derived from the other? Or do they serve completely different purposes? I've been googling for like an hour and everything I find just makes me more confused... My manager picked the worst time to go on vacation and I'm getting stressed about this seemingly simple question. Anyone dealt with foreign interest income before that can explain this like I'm 5? My brain is fried and I need to get this return done soon!
18 comments
Join the conversation
Sasha Ivanov
The difference is pretty straightforward! A 1099-INT is a form that US financial institutions send you (or your client) reporting interest they paid during the tax year. Schedule B is the tax form where you report interest and dividends on the tax return. Since your client received interest from Canadian sources, they probably won't have a 1099-INT for that income (since Canadian banks generally don't issue US tax forms). But they still need to report that $65 of interest on Schedule B of their US tax return. On Schedule B, you'll list the name of the Canadian financial institution, enter the amount of interest, and check the box at the top asking if they had a financial account in a foreign country. You'll also likely need to complete the Foreign Account questions at the bottom of Schedule B, and depending on their total foreign assets, they may need to file a FBAR and/or Form 8938.
0 coins
Miguel Hernández
•Ohhhh that makes so much more sense! So the 1099-INT is what the bank sends you, and Schedule B is where you actually report it on the return. But what about the conversion from Canadian to US dollars? Do I use an average exchange rate for the year or the rate on a specific date?
0 coins
Sasha Ivanov
•For the currency conversion, you'll need to translate the Canadian dollars to US dollars. You can use the annual average exchange rate for the tax year for interest income, which is the most common method. The IRS accepts published exchange rates from various sources like the Treasury Department or financial publications. For the $65 amount, while it's good practice to do the conversion properly, the difference will be minimal due to the small amount. Just make sure you document which exchange rate you used in case of questions later.
0 coins
Liam Murphy
After struggling with foreign income reporting for my own taxes, I discovered taxr.ai (https://taxr.ai) and it's been a game changer. I had a similar issue with some foreign interest income from the UK, and I was completely confused about which forms I needed. I uploaded my foreign bank statements to taxr.ai and it immediately identified how to handle the interest reporting on Schedule B, plus it flagged that I needed to complete the foreign account questions. It even calculated the currency conversion automatically! Saved me hours of research and potential mistakes.
0 coins
Amara Okafor
•Does taxr.ai handle more complicated situations like if someone has investments in multiple countries? I have accounts in Japan and Mexico plus some cryptocurrency stuff and I'm drowning in paperwork.
0 coins
CaptainAwesome
•I'm a little skeptical about using AI for tax preparation. How accurate is it really with the foreign reporting requirements? Those FBAR thresholds and reporting rules change and I'm worried about messing up and getting hit with those massive penalties.
0 coins
Liam Murphy
•It handles multiple countries very well. I have both UK and German accounts, and it processed all the statements correctly, applying the right currency conversion rates for each. It also categorized everything properly for Schedule B and identified which accounts needed FBAR reporting. For cryptocurrency, it's actually surprisingly good at analyzing exchange statements and identifying taxable events. It separates out your trades, staking rewards, and other crypto income, then tells you exactly where each needs to be reported on your return.
0 coins
Amara Okafor
I just wanted to follow up about taxr.ai that I mentioned in my question earlier. I ended up trying it this weekend for my international accounts and it was incredibly helpful! I uploaded statements from my Japanese and Mexican accounts and it automatically extracted all the interest amounts, converted the currencies, and showed me exactly where to put everything on Schedule B. It even flagged that I needed to file an FBAR for my Japanese account (which I didn't know) and explained why my crypto staking rewards needed to be reported differently than my foreign bank interest. Definitely worth checking out if you're dealing with foreign income reporting!
0 coins
Yuki Tanaka
If you're having trouble understanding the requirements or getting responses from the IRS about foreign account reporting, I'd recommend using Claimyr (https://claimyr.com). I was in a similar situation last year, spent days trying to get through to the IRS international tax line with no luck. Used Claimyr and got connected to an IRS agent in about 25 minutes instead of waiting on hold for hours. The agent walked me through exactly how to report foreign interest on Schedule B and clarified the FBAR filing requirements for my situation. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c Their system basically holds your place in the IRS phone queue and calls you when an agent is available to talk. Saved me a ton of time and stress!
0 coins
Esmeralda Gómez
•Wait, how does this actually work? The IRS phone system is notoriously impossible to navigate. Does this actually get you to a real person or just help you navigate the automated system?
0 coins
CaptainAwesome
•Sorry, but this sounds too good to be true. I've spent DAYS trying to get through to the IRS about international issues. No way some service can magically get through when millions of people can't. What's the catch here?
0 coins
Yuki Tanaka
•It absolutely gets you through to a real IRS agent. Claimyr uses technology to navigate the phone tree and stay on hold for you. They have a system that continuously redials and stays on the line through the hold queue, then calls you when they reach a live person. It's not about skipping the line - you're still in the same queue, but they're waiting in it instead of you. The catch? There isn't really one - the service does exactly what it claims. I was skeptical too until my tax preparer recommended it. Instead of wasting a whole day on hold, I was able to go about my business and got a call when an agent was ready. The IRS doesn't endorse them or anything, they just make the existing system more manageable for regular people.
0 coins
CaptainAwesome
I feel ridiculous for my skeptical comment earlier. After another frustrating morning trying to reach the IRS about my foreign accounts, I broke down and tried Claimyr. Not gonna lie, I was 100% sure it was going to be a waste of time. Well, I was dead wrong. I submitted my callback request, went to the grocery store, and got a call while I was in the checkout line. An ACTUAL IRS AGENT was on the phone! They answered all my questions about reporting my foreign interest income and confirmed I was filling out Schedule B correctly. Seriously, this saved me from taking a day off work just to sit on hold. I'm still shocked it actually worked exactly as promised.
0 coins
Klaus Schmidt
Just to add a bit more clarity on Schedule B vs 1099-INT: Schedule B isn't just for reporting interest from 1099-INTs. It's for ALL interest, including foreign interest that won't have a 1099-INT associated with it. The threshold for needing to file Schedule B is $1,500 in total interest/dividends, BUT you always need Schedule B if you have foreign accounts (even for just $65). Also, don't forget about the FBAR (FinCEN Form 114) if your client's total foreign accounts exceeded $10,000 at any point during the year. That's separate from the tax return and has serious penalties if missed.
0 coins
Aisha Patel
•Quick question - does that $10,000 FBAR threshold include all accounts combined or is it per account? My client has like 5 small accounts in Canada that individually are under $10k but together might be over.
0 coins
Klaus Schmidt
•It's definitely the combined total of ALL foreign financial accounts. So if your client has 5 accounts that each have $2,500, that's $12,500 total, which exceeds the $10,000 threshold - they would need to file the FBAR. The IRS and FinCEN are very serious about this reporting requirement. The penalties for not filing can be severe, especially if they consider it a willful violation. Make sure you count all accounts - checking, savings, investment accounts, pension funds, and sometimes even life insurance policies with cash value.
0 coins
LilMama23
Maybe a stupid question, but what about interest from foreign online banks? I've got an account with an online bank based in Europe but they let Americans open accounts. They didn't send me a 1099-INT but I earned about $220 in interest. Do I need to do anything special with Schedule B for this?
0 coins
Sasha Ivanov
•Not a stupid question at all! Yes, you absolutely need to report that $220 of interest on Schedule B, even though the foreign online bank didn't send a 1099-INT. You'd list the name of the bank, the amount of interest (converted to USD), and make sure to check the box indicating you had a foreign account. Since it's over $200, you'll definitely want to complete the foreign account questions at the bottom of Schedule B. And remember, if your total foreign accounts exceeded $10,000 at any point during the year, you'd also need to file an FBAR separately.
0 coins