The IRS taxes interest income, not the account itself — and it doesn't matter whose name is on it
You pay tax on the interest your joint savings account earns, not on the money sitting in it. The IRS treats interest as income to whoever earned it. If the account earns $500 in interest over a year, that $500 is taxable income to one or both account owners, depending on how the bank reports it and your state's tax rules.
The account ownership structure — whether it's held jointly, in one person's name, or as tenants in common — does not change whether interest is taxable. What changes is who reports the interest on their tax return. That depends on how the bank files the interest report with the IRS.
Key Takeaways
- Interest earned on a joint savings account is taxable income; the principal (the money you deposited) is not.
- The bank reports interest to the IRS on a Form 1099-INT, usually in the name of the first account holder or both owners, depending on the bank's system.
- If both names appear on the 1099-INT, you and your co-owner must split the interest income on your separate tax returns, even if one person contributed all the money.
- Some states tax joint account interest differently; a few states do not tax interest income at all, while others tax it only in the name of the account holder who earned it.
- If the interest is reported to the IRS under one person's name but you both own the account, you may need to file an amended return or work with a tax professional to split it correctly.
How the bank reports interest to the IRS
When your joint savings account earns interest, the bank generates a Form 1099-INT at the end of the year and sends copies to you and the IRS. This form shows the account number, the interest amount, and the name and Social Security number of the person the interest is reported under.
Most banks report joint account interest in the name of the first account holder only — the person whose name appears first on the account paperwork. Some banks report it in both names. A few report it in the name of whoever opened the account. There is no federal rule that requires banks to do it one way; each bank has its own system.
This creates a mismatch: the IRS receives a 1099-INT showing interest in one person's name, but both of you own the account and may have contributed to it. The person whose name is on the 1099-INT will receive a copy; the other owner usually does not.
What happens if only one name is on the 1099-INT but you both own the account
If the bank reports all the interest under one person's name, that person receives the 1099-INT and the IRS has a record of the income under their Social Security number. If you are the co-owner whose name is not on the form, you will not receive a copy from the bank, and the IRS will not have a record of the interest under your name.
You still owe tax on your share of the interest if you contributed to the account or if you and your co-owner agreed to split the earnings. The person whose name is on the 1099-INT can report all the interest on their return, or you can both report your shares separately. If you report your share, you will need to explain the split to the IRS if they question it later.
The safest approach is to contact your bank before the end of the tax year and ask how they report joint account interest. If they report it in one name only, ask whether they can split it between both owners on the 1099-INT, or whether you can request a corrected form. Not all banks will do this, but some will if you ask in writing.
State taxes on joint savings account interest
Federal tax is not the only tax on interest. Most states also tax interest income, and the rules vary. Some states follow the federal rule: interest is taxable to whoever the bank reports it to. Other states tax interest only in the name of the person who earned it, regardless of how the bank reported it.
A few states — including Illinois, Mississippi, and Tennessee — do not tax interest income at all, so joint account interest is not taxable at the state level in those places. If you live in one of these states, you still owe federal tax on the interest, but not state tax.
If you and your co-owner live in different states, the tax situation becomes more complex. You may each owe tax in your own state on your share of the interest, even if the bank reported it all in one name. A tax professional in your state can tell you how your state treats joint account interest.
When the interest is small enough that you don't have to report it
If your joint account earns less than $10 in interest during the year, the bank is not required to send you a 1099-INT. However, you still owe tax on that interest if your total income is high enough to require you to file a return.
The threshold for filing a return depends on your age, filing status, and type of income. For most people under 65 with only wage and interest income, you must file if your income exceeds roughly $13,000 to $14,000 per year, but this changes annually. If you are unsure whether you have to file, use the IRS Interactive Tax Assistant on irs.gov or consult a tax professional.
Splitting interest between co-owners on your tax return
If you and your co-owner want to split the interest income fairly — for example, because one person contributed most of the money — you can report your shares separately on your tax returns. This requires agreement between you and your co-owner, and you should document it in writing.
The person whose name is on the 1099-INT will report the full amount on their return, then file an amended return or adjustment to show only their share. The co-owner whose name is not on the form will report their share on their return and may need to attach a note explaining where the income came from. If the IRS questions the split, you will need to show proof of the agreement and the contribution amounts.
This is not automatic and requires coordination. If you do not split it and the person on the 1099-INT reports all the interest, the IRS will have no record of the other owner's share. That owner will owe tax on their share but will not have reported it, which can create a discrepancy if the IRS audits either return.
Joint accounts with minors and tax implications
If one account owner is a minor, the interest is still taxable. The minor's parent or guardian must report the interest on the minor's tax return if the minor is required to file. The threshold for a dependent child to file is lower than for adults — usually around $1,250 in unearned income (interest) per year, though this changes annually.
Some parents open joint accounts with minors to teach them about saving, and the interest income can trigger a filing requirement even if the child has no other income. If the interest is small, the child may not owe tax, but a return may still be required to claim a refund of any taxes withheld.
Frequently Asked Questions
Do I have to pay tax on money I deposit into a joint savings account?
No. Tax applies only to interest the account earns, not to the principal (the money you put in). If you deposit $5,000 and it sits there, that $5,000 is not taxable. Only the interest it generates is taxable income.
What if my co-owner and I disagree about who should report the interest?
The person whose name is on the 1099-INT is responsible for reporting it to the IRS. If you want to split it differently, you both need to agree in writing and file your returns accordingly. If you disagree, the IRS will follow the 1099-INT, and the person named on it will owe tax on the full amount unless they file an amended return.
Can I avoid taxes by putting money in a joint account instead of my own account?
No. Interest is taxable regardless of whose name is on the account or how many people own it. The only way to reduce taxable interest is to earn less interest — for example, by keeping less money in the account or moving it to an account with a lower rate.
Do I need to report the interest if the bank didn't send me a 1099-INT?
If the interest is under $10, the bank is not required to send a form, but you still owe tax on it if you are required to file a return. If the interest is $10 or more and you did not receive a 1099-INT, contact the bank and ask for one. If the bank cannot provide it, you can still report the interest on your return based on your account statements.
What happens if the interest is reported under my co-owner's name but I contributed all the money?
You can still claim your share of the interest on your tax return. You will need to file an amended return or attach a statement to your original return explaining the split. Keep documentation of your contributions and any agreement with your co-owner. If the IRS questions it, you will need to show proof.