Use Dictation with Earbuds' Microphone I have the ~$80 apple earbuds, and it has a built-in microphone which works fine. I've used it for skype and taking calls. In Preferences, the drop down for Dictation's input has 'Line-in", but when selected, Dictation does not hear me. In Sound preferences, 'Line-in' has the full title of 'Audio Line-In Port', so it is 'there'.

So I'm just curious why Dictation won't listen via my earbud microphone.
Your earbuds have one plug that goes into the headphone socket on your laptop, that socket does NOT have a microphone pickup.

The socket in your iPhone is dual capable, both headphone and microphone connections.

You will need to get a headset that has both a microphone and headphone plugs if you want to use your laptop for dictation