Hazel earned $3,000 in interest from four savings accounts. How should she report this income?

Hazel should report her interest income on Schedule B and file it because Schedule B is specifically designed for reporting interest and ordinary dividends. The requirement to report interest and dividends applies when a taxpayer earns more than a certain threshold, and since Hazel earned $3,000, she surpasses that threshold. Listing each payer allows the IRS to see where the interest income is coming from, ensuring accuracy and compliance with tax obligations.

If an individual earns interest income and does not report it correctly, it could lead to issues with the IRS, such as audits or penalties. Therefore, utilizing Schedule B not only fulfills compliance requirements but also maintains clear and organized record-keeping of income sources.