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Tax Return Line Item Review

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SCHEDULE B (Form 1040) Interest and Ordinary Dividends Department of the Treasury Internal Revenue Service Go to www.irs.gov/ScheduleB for instructions and the latest information. Attach to Form 1040 or 1040-SR. OMB No. 1545-0074 Attachment Sequence No. 08 Name(s) shown on return Your social security number Part I Interest (See instructions and the Instructions for Form 1040, line 2b.) Note: If you received a Form 1099-INT, Form 1099-OID, or substitute statement from a brokerage firm, list the firm's name as the payer and enter the total interest shown on that form. 1 List name of payer. If any interest is from a seller-financed mortgage and the buyer used the property as a personal residence, see the instructions and list this interest first. Also, show that buyer's social security number and address: Amount 1 2 Add the amounts on line 1 . . . . . . . . . . . . . . . . . . . 2 3 Excludable interest on series EE and I U.S. savings bonds issued after 1989. Attach Form 8815 . . . . . . . . . . . . . . . . . . . . . 3 4 Subtract line 3 from line 2. Enter the result here and on Form 1040 or 1040-SR, line 2b 4 Note: If line 4 is over $1,500, you must complete Part III. Part II Ordinary Dividends (See instructions and the Instructions for Form 1040, line 3b.) Note: If you received a Form 1099-DIV or substitute statement from a brokerage firm, list the firm's name as the payer and enter the ordinary dividends shown on that form. 5 List name of payer: Amount 5 6 Add the amounts on line 5. Enter the total here and on Form 1040 or 1040-SR, line 3b 6 Note: If line 6 is over $1,500, you must complete Part III. Part III Foreign Accounts and Trusts Caution: If required, failure to file FinCEN Form 114 may result in substantial penalties. Additionally, you may be required to file Form 8938, Statement of Specified Foreign Financial Assets. See instructions. You must complete this part if you (a) had over $1,500 of taxable interest or ordinary dividends; (b) had a foreign account; or (c) received a distribution from, or were a grantor of, or a transferor to, a foreign trust. Yes No 7 a At any time during 2022, did you have a financial interest in or signature authority over a financial account (such as a bank account, securities account, or brokerage account) located in a foreign country? See instructions . . . . . . . . . . . . . . . . . . . . . . . . If "Yes," are you required to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), to report that financial interest or signature authority? See FinCEN Form 114 and its instructions for filing requirements and exceptions to those requirements . . . . . . b If you are required to file FinCEN Form 114, list the name(s) of the foreign country(-ies) where the financial account(s) are located: 8 During 2022, did you receive a distribution from, or were you the grantor of, or transferor to, a foreign trust? If "Yes," you may have to file Form 3520. See instructions . . . . . . . . . For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 17146N Schedule B (Form 1040) 2024 Line 1: Take note where the interest is coming from: i.e., a bank or brokerage account, or from a flow-through entity like a trust, or business entity. Be aware taxable interest is taxed at ordinary income rates (taxpayers marginal tax rate). A tax equivalent yield calculation, using the taxpayers specific tax rates, could be done to determine which would be more favorable—investments that generate taxable interest, or investments that generate tax-free interest. Generally, if the taxpayer is in the 22% tax bracket or lower, taxable interest is favored. If the taxpayer is between the 22% and 32% tax brackets, a balance between taxable and tax-free is considered. If the taxpayer is above the 32% tax bracket, tax-free is typically favored. Line 5: Take note where the dividends are coming from: a brokerage account, mutual fund, or through a flow-through entity like a trust. There is a tax rate difference between ordinary and qualified dividends: ordinary dividends are taxed at ordinary income rates (taxpayers marginal tax rate). Qualified dividends are taxed at capital gain rates (0%, 15%, or 20% depending on filing status and taxable income). Note: Mutual fund short-term capital gain distributions are reported as an ordinary dividend and are not tax favored like qualifying dividends. If there is a significant spread between total dividends and qualifying dividends, further investigation is warranted to determine the tax-inefficient investments. If possible, consider placing the tax-inefficient investments in tax-deferred accounts. 2024

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