Learn about the filing requirements for dividends and interest

You may have filing requirements for dividends and interest. Learn what they are.

Overview

Dividend is any item of federal gross income treated as a dividend under the Internal Revenue Code (Code). Generally, it’s a distribution made by a corporation to its shareholders of company earnings and profits.

Ordinary dividend has the same meaning as a dividend.

Interest has the same meaning as in Code Section 163 including all amounts treated as interest by virtue of the operation of other Code sections.

Interest from Bonds and Obligations, Massachusetts Treatment

Federal gross income excludes interest income from state and local obligations.

  • These excluded amounts are reported for informational purposes only on U.S. Form 1040, Line 8b.

Massachusetts gross income includes interest income from state and local obligations to the extent such interest is excluded from federal gross income. Massachusetts gross income doesn't include interest income from obligations issued by:

  • Massachusetts or
  • Any political subdivision.

Amounts excluded from federal gross income and reported for informational purposes only on U.S. Form 1040, Line 8b are reported on Massachusetts Schedule B, Line 1, including interest income from obligations issued by:

  • Massachusetts or
  • Any political subdivision.

Since interest from obligations issued by Massachusetts or any political subdivision is reported on:

  • Massachusetts Schedule B, Line 1, such amount will be subtracted on:
  • Massachusetts Schedule B, line 6.

Massachusetts gross income doesn't include interest on obligations of the United States to the extent such interest is included in federal gross income. These amounts are reported and taxed on:

  • U.S. Form 1040, Line 8a and included on:
  • Massachusetts Schedule B, Line 1.
  • These amounts are then excluded from Massachusetts Schedule B, Line 6 to the extent included in federal gross income.

Certain interest defined as Massachusetts bank interest qualifies for an exemption of either:

  • $100 or
  • $200 depending on filing status.

.

Threshold for Filing Mass Schedule B

Massachusetts Follows Federal Filing Requirements for Dividends Only

Taxpayers don't need to file Federal Schedule B if they have ordinary dividend income of $1,500 or less.

Massachusetts Requirement to File Schedule B for Interest

As in previous years, certain taxpayers with

  • Bank or other financial accounts in a foreign country, and
  • Foreign trust transactions,

 must continue to file Schedule B regardless of the amount of interest or dividends they receive.

Dividends Including Federal Qualified Dividends - Amount Reported Federally

Each taxpayer issues a Form 1099-DIV, Dividends and Distributions:

  • Total ordinary dividends which are found in Box 1a of the 1099-DIV are reported on:
    • U.S. Schedule B, Part II, Line 6 and
    • U.S. Form 1040, Line 9a
  • Qualified dividends are found in Box 1b of the 1099-DIV. This is the portion of the amount in box 1a that is considered to be qualified dividends eligible for a lower tax rate federally. This amount, included in both Schedule B, Part II, Line 6 and then on U.S. Form 1040, Line 9a, is reported on:
    • U.S. Form 1040, Line 9a
    • U.S. Form 1040, Line 9b.

Additional information

Massachusetts References

Money Market Deposit Accounts


Real Estate Tax Escrow Interest

  • LR 79-10: Interest Paid By a Credit Union on Advance Payments of Real Estate Taxes


State/Municipal Obligations

Federal Obligations

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