You must report all interest earned on savings accounts to the IRS, even if the bank does not send you a tax form
The IRS requires you to report every dollar of interest your savings account earns, regardless of the amount. This applies to traditional savings accounts, money market accounts, certificates of deposit (CDs), and any other account that pays interest. The bank does not have to send you a form for you to owe the tax—you owe it whether or not you receive one.
Banks send a Form 1099-INT to the IRS and to you when interest reaches $10 or more in a calendar year. If your account earned less than $10, the bank will not send a form, but you still must report the interest on your tax return. The IRS has records of what banks reported, so underreporting or omitting interest can trigger an audit notice.
Interest is taxed as ordinary income at your regular tax rate, which varies based on your total income and filing status. A savings account earning $50 in interest is treated the same way as $50 in wages for tax purposes.
Key Takeaways
- Report all interest earned on savings accounts to the IRS, even amounts under $10 that do not trigger a Form 1099-INT.
- Banks report interest of $10 or more on Form 1099-INT, which they send to both you and the IRS by January 31.
- Interest is taxed as ordinary income at your marginal tax rate, not at a special rate.
- If you do not receive a Form 1099-INT but earned interest, contact the bank to request a corrected form or statement showing the amount.
When the bank sends Form 1099-INT and when it does not
Banks mail Form 1099-INT by January 31 of the year following the one in which interest was earned. The form shows the total interest paid to you during the previous calendar year. You receive a copy, and the bank sends a copy to the IRS.
The $10 threshold is a reporting requirement, not a tax threshold. If you earned $8 in interest, the bank will not send a form, but you still owe tax on that $8. You must add it to your tax return manually. If you earned $10 or more, the bank sends the form, and you use it to fill in your return.
Some banks issue a 1099-INT for every account that earned any interest, regardless of amount. Others follow the $10 rule strictly. Check your bank's policy or call to ask whether they will send a form for your account.
How to report interest if you do not receive a Form 1099-INT
If you earned interest but did not receive a form, you have two options: contact the bank or report the interest without the form.
Call your bank's customer service line and ask for a corrected 1099-INT or a statement showing the interest earned. Most banks can issue a corrected form within one to two weeks. Provide your account number and the year in question. If the bank confirms you earned interest but refuses to send documentation, ask for a written statement you can attach to your return.
If you cannot obtain a form, report the interest on your tax return anyway. On the IRS Form 1040, interest income goes on Schedule 1, line 8b (or the equivalent line for your filing year). Write the amount and note "Interest not reported on 1099-INT" if you want to explain the discrepancy. The IRS may contact you later if the amount seems inconsistent with bank records, but reporting it voluntarily is better than omitting it.
What happens if you do not report interest income
The IRS receives a copy of every Form 1099-INT issued. If you do not report the interest on your return, the IRS will eventually notice the mismatch between what the bank reported and what you reported. This triggers an automated notice asking you to explain the difference or pay the tax owed plus interest and penalties.
Penalties for underreporting interest range from 20% to 75% of the unpaid tax, depending on whether the IRS determines the error was negligent or fraudulent. Interest accrues on the unpaid tax at a rate set quarterly by the IRS (currently around 8% annually, but this changes). A $50 interest payment you failed to report could result in $10 to $37.50 in penalties plus several dollars in interest, depending on how long the error went undetected.
If you discover you missed reporting interest in a prior year, you can file an amended return (Form 1040-X) for that year. Filing an amended return voluntarily before the IRS contacts you usually results in lower or no penalties, though you will still owe the tax and interest on the unpaid amount.
Interest from joint accounts and accounts held by minors
If you own a joint savings account, the bank reports all interest to both owners on separate 1099-INT forms. Each owner receives a form showing the full amount of interest earned. You and the other owner must decide how to split the interest for tax purposes—usually 50/50 if you own it equally, or according to your ownership agreement if it differs.
If a parent opens a savings account for a minor child, the bank reports the interest on a 1099-INT in the child's name and Social Security number. The child must report this interest on their own tax return, even if the parent controls the account. A child with no other income may not owe tax on the interest (depending on the standard deduction for that year), but they still must file a return to report it.
High-yield savings accounts and interest reporting
High-yield savings accounts earn more interest than traditional accounts, which means you are more likely to receive a 1099-INT. The reporting requirement is identical: all interest must be reported to the IRS, and the bank sends a form if interest reaches $10 or more.
Because high-yield accounts often earn $50 to $500+ annually depending on your balance, you will almost certainly receive a form. The higher interest also means a larger tax bill. If you earned $300 in interest and your tax rate is 24%, you owe $72 in federal tax on that interest alone. Factor this into your decision about where to keep your savings.
Reporting interest on your tax return
On the federal Form 1040, interest income is reported on Schedule 1, line 8b. If you received a 1099-INT, enter the amount shown on the form. If you did not receive a form but earned interest, enter the amount you calculated from your bank statements.
Some tax software will import 1099-INT data directly if you link your bank account. Others require you to enter the amount manually. If you file by mail, attach a copy of the 1099-INT to your return.
State income tax returns also require you to report interest income. Most states follow the federal rule and tax interest as ordinary income. A few states (like New Hampshire and Tennessee) do not tax interest, but you must still report it on the federal return.
Frequently Asked Questions
Do I have to report interest if I earned less than $10?
Yes. The $10 threshold only determines whether the bank sends you a Form 1099-INT. You must report all interest earned, no matter the amount. Add it to your tax return manually if you do not receive a form.
What if I have multiple savings accounts at different banks?
Report the interest from each account separately on your tax return. If each account earned $10 or more, you will receive a separate 1099-INT from each bank. Add all the amounts together on Schedule 1, line 8b of your Form 1040.
Can I deduct expenses related to my savings account?
No. Interest income is reported as-is; you cannot deduct account fees, maintenance charges, or other costs against it. However, if you paid investment advisory fees to manage a taxable account, those may be deductible under certain circumstances—consult a tax professional.
What if the 1099-INT shows the wrong amount?
Contact your bank immediately and ask for a corrected form (called an amended 1099-INT). The bank will issue a corrected form and send it to both you and the IRS. Report the corrected amount on your tax return, and keep a copy of the corrected form with your records.
Do I report interest from a savings account held in a trust or estate?
No—the trust or estate reports it. If you are the trustee or executor, the trust or estate files its own tax return (Form 1041) and reports the interest there. You do not report it on your personal return.