Yes, you must report all savings account interest as income on your federal tax return
The IRS treats savings account interest as taxable income, no matter how small the amount. Your bank sends you a Form 1099-INT each January if you earned $10 or more in interest during the previous year. Even if you don't receive a 1099-INT, you still owe tax on any interest you earned—the $10 threshold is just when the bank is required to report it to the IRS.
Interest counts as ordinary income and gets taxed at your regular income tax rate, which depends on your total income and filing status. You report it on Schedule B (Interest and Ordinary Dividends) if you have more than $1,500 in interest and dividends combined, or directly on Form 1040 if you have less.
The amount of interest you earn varies by account type and the interest rate your bank offers. High-yield savings accounts currently pay more interest than traditional savings accounts, so you're more likely to cross the $10 reporting threshold with one of those.
Key Takeaways
- You must report all savings account interest on your tax return, even amounts under $10 that don't trigger a 1099-INT form.
- Your bank sends Form 1099-INT in January if you earned $10 or more in interest during the previous year.
- Interest is taxed as ordinary income at your regular tax rate, not at a special lower rate.
- You report interest on Schedule B if your total interest and dividends exceed $1,500, or directly on Form 1040 if below that threshold.
- High-yield savings accounts generate more interest than traditional accounts, making them more likely to require reporting.
How to find your interest amount on the 1099-INT
Your bank mails or emails the 1099-INT by January 31 each year. The form shows interest paid to you during the previous calendar year in Box 1. This is the number you report on your tax return. The form also shows your account number and the bank's name and tax ID.
Keep your 1099-INT with your tax records. You don't send it to the IRS with your return—the bank files a copy directly with them. However, the IRS matches what you report against what the bank reported, so the numbers must match.
If you have accounts at multiple banks, you'll receive a separate 1099-INT from each one. Add up the interest from all forms and report the total on your return.
What to do if you earned interest but didn't get a 1099-INT
If you earned less than $10 in interest, your bank won't send a 1099-INT. You still must report that interest on your tax return. Look at your account statements from December to find the exact amount earned that year.
If you earned $10 or more and didn't receive a 1099-INT by early February, contact your bank. Ask them to send it or provide the interest amount. Banks sometimes mail forms to outdated addresses, so check that your address is current in your account.
If the bank confirms they sent it but you never received it, you can request a duplicate. The bank can provide this within a few business days. If you still can't get the form before filing, you can file your return with your best estimate of the interest and amend it later when you receive the 1099-INT.
Interest from different account types and where to report each
| Account Type | Where Interest Appears | Form to Report On |
|---|---|---|
| Traditional savings account | 1099-INT, Box 1 | Schedule B or Form 1040 |
| High-yield savings account | 1099-INT, Box 1 | Schedule B or Form 1040 |
| Money market account | 1099-INT, Box 1 | Schedule B or Form 1040 |
| Certificate of deposit (CD) | 1099-INT, Box 1 | Schedule B or Form 1040 |
| Interest-bearing checking account | 1099-INT, Box 1 | Schedule B or Form 1040 |
All of these account types generate interest that counts as ordinary income. The reporting process is the same regardless of which type you use.
When interest is too small to matter for taxes
Even if your interest is very small, you still report it. However, if your total income is low enough that you don't owe taxes anyway, reporting the interest won't change that. For example, if you're a dependent with only $100 in interest income and no other income, you likely won't owe tax because your income is below the standard deduction.
The standard deduction varies by age and filing status. For 2024, a single person under 65 has a standard deduction of $14,600. If your total income (including interest) is below that, you won't owe federal income tax. However, you may still need to file a return for other reasons, such as claiming a refundable tax credit.
Don't skip reporting interest just because the amount is small. The IRS cross-checks 1099-INT forms against tax returns, and mismatches can trigger an audit notice even if the tax owed would be minimal.
How interest affects other tax situations
Interest income can push you into a higher tax bracket if you're close to the edge of one. It can also affect whether you're required to file a return, whether you can claim certain credits, and whether you have to pay the Net Investment Income Tax (a 3.8% tax on investment income for higher earners).
If you're receiving Social Security, interest income counts toward the income threshold that determines how much of your benefits are taxable. If you're a student claimed as a dependent, interest income affects whether you can file your own return and claim your own exemption.
These interactions are complex and depend on your full tax picture. If you have significant interest income or other investment income, consider talking to a tax professional to understand the full impact.
Frequently Asked Questions
Do I have to report interest if I only earned a few dollars?
Yes. The $10 threshold only determines when your bank must send a 1099-INT—it doesn't determine what you must report. You report all interest earned, even $1 or $2. The IRS matches bank reports against your return, so omitting small amounts can trigger an audit notice.
What if my 1099-INT shows the wrong amount?
Contact your bank immediately and ask them to issue a corrected form (called an amended 1099-INT). Once you receive it, file an amended tax return using Form 1040-X with the correct interest amount. Keep records of your communication with the bank in case the IRS asks questions.
Can I deduct any expenses related to my savings account?
No. Ordinary savings account interest is reported as income with no deductions. You cannot deduct account fees, even if the bank charged you a monthly maintenance fee. The interest you report is the net amount the bank paid you.
Does interest from a joint account get split between owners for tax purposes?
Not automatically. The bank reports all interest to the Social Security number listed as the account owner. If the account is truly joint and you both contributed equally, you may need to split the interest between you for tax purposes, but you'll need to work this out with the other owner and possibly a tax professional. The person who receives the 1099-INT should report it and coordinate with the co-owner.
What if I moved money between banks mid-year and got two 1099-INTs?
Add the interest from both forms and report the total on your return. Each bank reports only the interest earned while your money was in their account. The combined total is what you owe tax on.