How should Mary report the interest income she received from her uncle?

Mary should report the interest income on Schedule B and file it with her tax return because Schedule B is specifically designed for reporting interest and ordinary dividends. Interest income, such as that received from her uncle, must be included in her total taxable income and reported properly to comply with tax regulations.

When filing, the amount reported on Schedule B helps to provide a detailed account of interest and dividends that Mary has earned during the tax year. This ensures that the IRS has a clear picture of her income sources. Additionally, if her total interest income exceeds a certain threshold, Schedule B also helps to flag that for the IRS.

Using Form 1040 alone would not provide the level of detail that Schedule B offers regarding interest income. Reporting it below the line on her tax return without utilizing the appropriate schedules could lead to confusion or misreporting. Schedule C, on the other hand, is intended for profit or loss from a business, which is not relevant for interest income. Therefore, listing the amount on Schedule B maintains proper tax protocol and ensures compliance.