Question

Gary received significant dividend income during the tax year. How should he report the dividend income if he has ordinary dividend income in excess of $1,500?

Answer 1

If Gary’s ordinary (non‑qualified) dividend income for the year exceeds $1,500, he must complete and attach Schedule B (Form 1040), Part II — Ordinary Dividends.

Steps:
1. Gather all 1099‑DIVs (and any other records of dividends).
2. Complete Schedule B Part II: list each payer and the dividend amount (use an attached statement if there are more payers than lines).
3. Total the dividends on Schedule B and transfer that amount to the ordinary dividends line on Form 1040.
4. Report any qualified dividends separately on the qualified dividends line of Form 1040 (these affect the preferential tax calculation). Use the Qualified Dividends and Capital Gain Tax Worksheet if needed.
5. Answer the Part III questions on Schedule B if you had foreign accounts or signature authority over foreign accounts (this may trigger FBAR or other reporting).

If Gary uses tax software it will prompt him to complete Schedule B when ordinary dividends exceed $1,500.