Does Schedule B require reporting interest income under $1500? HR Block software confusion

I'm helping my sister file her taxes through HR Block online, and we've run into something weird. She earned about $1800 in dividends last year plus around $1200 in interest income from some CDs that matured. The dividends show up correctly on her Schedule B, but the HR Block software completely left off the interest income from Schedule B (though it does appear on the 1040). I thought ALL interest and dividends over $1500 COMBINED needed to be on Schedule B, but now I'm confused since only the dividends made it onto Schedule B. The interest income is definitely under $1500 by itself, but combined with dividends it's well over. I tried calling HR Block support but the rep seemed as confused as I am. They just kept saying the software handles it automatically, which wasn't helpful. Does anyone know the actual rule here? Should interest under $1500 be on Schedule B when dividends are already being reported there? Thanks for any help!

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18 comments

Hiroshi Nakamura

•8M

The rule for Schedule B is actually a bit different than what you're thinking. Schedule B (Interest and Ordinary Dividends) requires reporting if EITHER your interest income OR your dividend income exceeds $1,500 individually - not combined. Since your sister has over $1,500 in dividends ($1800), those must be reported on Schedule B, which the software correctly did. However, since her interest income is under $1,500 ($1200), technically it doesn't need to be included on Schedule B, even though it still gets reported on the 1040. That said, many tax preparers and even some software will include both on Schedule B anyway once it's triggered by either category exceeding the threshold. It's not incorrect to include the interest on Schedule B even when it's under $1,500 - it's just not required.

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Hiroshi Nakamura

•8M

That's exactly right! If both categories are under $1,500 individually ($900 interest and $900 dividends in your example), then Schedule B wouldn't be required at all. The schedule is only triggered when either type of income exceeds $1,500 on its own. Both amounts would still be reported on the appropriate lines of the 1040, but Schedule B wouldn't need to be attached. This is why the HR Block software included the dividends on Schedule B (since they exceeded $1,500) but didn't include the interest (since it was under $1,500).

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Isabella Costa

•8M

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Isabella Costa

•8M

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Freya Andersen

•8M

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Ravi Patel

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Just to add a bit more clarity on Schedule B: if you have any foreign accounts or trusts, you're required to file Schedule B regardless of the amount of interest or dividends. That Part III section about foreign accounts trips up a lot of people. Also, even though it's not technically required to list interest under $1500 on Schedule B, I personally always include it anyway when the form is already being generated for dividends. It makes your return more complete and transparent in case of any questions later.

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Ravi Patel

•8M

Yes, a Canadian retirement account absolutely counts as a foreign account, even if it's not generating much income. You would need to file Schedule B and complete Part III to indicate you have a foreign account. You may also need to file an FBAR (FinCEN Form 114) if the total value of all your foreign accounts exceeded $10,000 at any point during the year. The foreign account reporting requirements are completely separate from the interest/dividend thresholds. Even if you had $0 in interest and dividends, you'd still need Schedule B to report the existence of foreign accounts. The IRS takes foreign account reporting very seriously, so it's definitely something you want to make sure you do correctly.

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